European Central Bank Expected To Cut Interest Rates

GBP: The British Pound gained ground against weaker currencies yesterday, despite the absence of significant economic data. The only notable release was the final services PMI, which matched preliminary estimates and indicated a slowdown in activity. However, optimism surrounding the UK's crucial services sector seems to have supported the Pound. With a sparse economic calendar today, the Pound may trade without clear direction.

EUR: The Euro experienced some selling pressure yesterday, struggling to gain support ahead of today's European Central Bank (ECB) meeting. The ECB is expected to lower borrowing costs for the euro area for the first time since September 2019. Since the first-rate cut is already anticipated by the markets, investors will be closely watching ECB President Christine Lagarde for insights into future monetary policy directions.

USD: The U.S. Dollar weakened again yesterday after soft ADP employment data suggested further cooling in the labour market. This followed a weak job openings report and set the stage for a potentially disappointing Non-Farm Payroll reading on Friday. Other economic indicators also signalled a slowdown in the U.S. economy, which could lead to a softer inflation outlook and increase the likelihood that the Federal Reserve might start cutting rates.

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