Sterling, euro slide despite ECB rate hike

GBP/USD traded lower by 0.13 per cent at 1.3352, while EUR/USD slid 0.08 per cent to 1.1528

Sterling and the euro slid on Thursday as the ECB’s widely anticipated 25 basis point rate hike failed to lift the single currency, as markets concluded that a 75bp tightening cycle is already fully priced and the bar for a hawkish surprise capable of moving the euro materially higher has rarely been harder to clear.

As of 12:31 GMT, GBP/USD traded lower by 0.13 per cent at 1.3352, while EUR/USD slid 0.08 per cent to 1.1528, with both pairs drifting as the Governing Council explicitly refused to pre-commit to a rate path, leaving the July question unanswered and the single currency without a new directional catalyst.

The ECB raised its deposit rate to 2.25 per cent, citing Middle East war-driven energy inflation, revising its 2026 headline inflation forecast up to 3.0 per cent while cutting growth to 0.8 per cent for the year.

Short-term resistance at 1.1565/75 remains intact, and a failure to clear that level keeps 1.1500 as the next critical.

Short-dated EUR swap rates remain higher and decoupled from crude, signalling that the central bank tightening narrative is sticky regardless of individual data prints.

DXY holds near 100, with today’s PPI release the next catalyst to nudge it toward the 100.25/35 area.

Sterling’s softness reflects the same dynamic, dollar resilience rather than any pound-specific deterioration.

The Bank of England remains sidelined with no domestic catalyst on the horizon, and cable’s pro-risk character leaves it exposed if today’s macro data triggers an equity sell-off. ING’s 1.3300 target for the week remains in view, with 1.3200 the extension if dollar momentum reasserts.