The ECB extended forward guidance with no interest rate increase expected until at least the end of 2019.

The ECB extended forward guidance with no interest rate increase expected until at least the end of 2019 and new TLTRO low-cost financing for commercial banks.

The Euro declined sharply on the dovish policy stance with losses on all the major crosses.

Fed Governor Brainard made dovish comments, although the dollar continued to gain support by default and on expectations of relative out-performance with EUR/USD hitting 20-month lows below 1.1200.

Equity markets came under pressure and losses accelerated on Friday after very weak Chinese trade data reinforced growth concerns.

Oil prices were resilient on expectations of weak supply and solid demand from China. Precious metals also regained ground as global risk appetite declined.

Bank of England MPC member Tenreyro stated that interest rates were likely to rise slightly if there was a smooth Brexit. Sterling was unable to make any headway ahead of the New York open with net losses as Brexit deadlock continued and officials did not expect any breakthrough in talks over the next two days with the atmosphere notably tense.

The lack of positive developments undermined Sterling, although the ECB decision had a bigger market impact. GBP/EUR rallied to 21-month highs above 1.1700 on wider Euro losses while GBP/USD dipped below 1.3100.

Talks will continue during Friday and over the weekend with a high degree of uncertainty ahead of key parliamentary votes next week given negotiating tactics. In this environment, there is liable to be choppy trading on Friday given the risk of significant developments over the weekend and GBP/USD was held just below 1.3100 in early Europe.

Economic Calendar