The euro gained ground against the US dollar during the European trading session. The EUR/USD pair reached the level of 1.23, hitting the 3-year high. After that, the pair consolidated. Yesterday, it was reported that the global economic growth accelerated. Consequently, some experts suggested that most central banks will likely reconsider their plans for normalization of monetary policy stances, and changes are likely to take place in the near future. However, market participants still doubt that the ECB policy makers will tighten the monetary policy. Next week, the European Central Bank will announce its interest rate decision. Most analysts expect that the bank’s rhetoric will remain dovish. Probably, Mario Draghi will speak about persisting inflation pressure, which prevents the ECB from tightening the monetary policy.
Yesterday, the Eurostat released the consumer price index reading. According to the report, that annual inflation came in at 1.4%, matching the market expectations. As long as the inflation rate is stuck below 2%, no changes can be expected. However, investors are more interested in other issues. Namely, they wonder whether the ECB will taper the quantitative easing program or not, if the price growth remains sluggish.
Furthermore, the pound sterling has strengthened against the greenback as well. The cable is trading near the level of 1.3838. Market participants got back on the Brexit topic, hoping that the terms of leaving the EU will be mild. Besides, the British currency gains ground amid the comments of one of the BOE officials who said that the interest rate should be increased. Bearing in mind expectations of investors, the rally in the EUR/USD pair is likely to continue while the British pound will probably take time out.
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