Dear Reader,

Today's overview of economic news and market action:

• Risk averse tone continued yesterday …
• Currency markets remained range bound …
• Sees EUR/USD open in the lower half of $1.09-1.10 …
• GBP/USD is operating near the midpoint of $1.27-1.28 …
• EUR/GBP remains in the 85-86p corridor …
• UK CPI inflation data prints above consensus in May …
• Focus on Fed Chair Powell testimony to Congress today …

ECB’s Strong Four-hand

The Euro area economy has lost considerable momentum since last summer.

ECB hikes rates by a further 25bps, but not done yet

As had been widely expected, the June meeting of the ECB’s Governing Council saw the central bank raise rates by a further 25bps, pushing the key deposit rate up to 3.5%.

ECB Sticks to the Tightening Script

The Euro area economy has lost considerable momentum since last summer. GDP fell by 0.1% in the final quarter of 2022 and again in the opening quarter of 2023, with the economy thus entering a technical recession.