Euro to stay strong until US and UK hike rates

The ECB left interest rates unchanged at last week’s governing council meeting. In justifying the decision not to alter policy, ECB president, Mario Draghi, stated that the economy is developing in line with its expectations for a moderate recovery, together with a prolonged period of low inflation.

Indeed, president Draghi cited specific examples of the macro news being on the “positive side” since the council’s meeting in February, which confirmed that the economy is proceeding in line with the ECB’s previous assessment.

These examples included the composite PMI in February rising to its strongest level for two and a half years, a narrowing in the gap in consumer confidence levels between Germany and the periphery, signs of stabilisation in eurozone unemployment and a pick-up in GDP growth in the fourth quarter of last year.