ECB Hike Fails to Spark Stronger Euro as Market Awaits BoE Decision

The European Central Bank (ECB) raised its deposit rate to 2.50% in a widely expected move, but the Euro (EUR) only gained modestly against the British Pound (GBP) as the market had largely priced this in.

According to data from Reuters, all 65 economists surveyed between September 4 and 8 expect the Bank of England (BoE) to keep its policy rate unchanged at 3.75% on September 17.

The ECB's decision was influenced by Middle East tensions keeping inflation elevated, with headline inflation projected to average 3.0% in 2026, 2.5% in 2027, and 2.1% in 2028.

ECB President Christine Lagarde noted that while the Eurozone economy is proving resilient, shorter-term inflation expectations are still elevated, and higher energy costs will gradually feed into core and food prices.