05.06.2020 Eur/Gbp Daily Analysis

05.06.2020 Eur/Gbp Daily Analysis

Eur/Gbp today is trading at 0.8985; it is trading lower with 0.23% mainly because the ECB on Thursday announced that it kept its key interest rates unchanged as expected. More importantly, the bank said it expanded its Pandemic Emergency Purchase Programme (PEPP) by €600 billion to further support the economic recovery. Assessing the details of the policy statement, "the bank extended the length of the PEPP to June 2021 – a year from now. The initial funds were projected to run out by the autumn and while the bank promised flexibility – potentially purchasing more bonds of hard-hit countries such as Spain and Italy – it refrained from junk bonds. Additionally, Christine Lagarde, President of the ECB, said that they were confident about finding a solution with regards to German constitutional courts ruling on the ECB's asset purchase program. Christine Lagarde said more largesse was needed, given the likely hit to the region’s economies from the social distancing measures put in place to combat the Covid-19 outbreak.  More so, Sterling is surging despite the Brexit gridlock. The current round of talks about future EU-UK relations concludes today and will unlikely result in any breakthrough. Hopes for mutual concessions have faded away but do not deter the pound.