As the European Central Bank (ECB) prepares to meet later this week, clients are strongly encouraged to stay close to the developments…

The latest ECB Interest Rate decision is due at 12.45pm on Thursday, followed by the usual press conference with ECB President Mario Draghi at 1.30pm.

The rate is widely expected to remain at the current record low of 0.05%. However, the Eurozone recently slipped back into deflation by producing a negative inflation reading of -0.2%.

This has intensified pressure on the ECB to further ramp up their current stimulus package of Quantitive Easing (QE), which was introduced last December to boost growth in the eurozone economy and stave off the risks of negative inflation.

Markets are now expecting the introduction of further policy measures, which could include:

• A further cut in the overnight deposit rate
• An increase in the size of the current QE programme
• An expansion of the length of the current QE programme

The extent of any such new measures could theoretically result in euro weakness, sending it tumbling against the pound.

On the other hand, if the ECB’s stated actions are less than the forecasters are expecting, then this could strengthen the euro and further weaken the pound.

Uncertainty reigns, and the only thing we can be sure of is that the markets will be watching keenly to see what the ECB announces on Thursday, and we strongly suggest that you do too.

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* Information courtesy of Currencies Direct
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information. This article was written Currencies Direct.