The Euro has been in control of late the GBP/EUR pair of late with
the single currency enjoying a profitable mid-week session with gains
peaking on Thursday the 8th September.
The advance was capped that day by the ECB's policy meeting.
The ECB announced no new stimulatory measures which was at first positive for the Euro.
ECB President Mario Draghi is clear that he believes the Bank's policies are working and that further economic progress now rests with national goverments.
In fact, Draghi hinted that an extension of QE had not even been discussed at yesterday’s meeting.
This all suggests that the ECB is in no rush to introduce fresh pro-growth and EUR-negative policies.
"Clearly, markets expected more action or, at least, clearer signals from the ECB on additional stimulus measures," note Lloyds Bank Commecial Banking in response to the event.
This should allow the Euro to remain firm ahead of the weekend and
looking at the leader-board at present the shared currency is the third
best performer in G10 after the New Zealand Dollar and Yen.
The Euro could have done better, but on reflection traders cut back
exposure to the single currency ahead of the weekend in the belief that
some kind of action would yet be delivered before the end of the year.
Downgrades to both inflation and economic growth at the Thursday event attest to these expectations for further rate cuts.
Understandably GBP/EUR has moved lower in the face of the Euro's strong mid-week bid.
The pair remains prone to further weakness in light of the dominant long-term down-trend triggered by the June Brexit vote