EUR/GBP: Heavy selling on Draghi comments

FXStreet (London) - EUR/GBP has tumbled on the European Central Bank’s (ECB) decision to cut rates as well as ECB president Mario Draghi’s subsequent announcement that the Bank will be rolling out a package of targeted long-term refinancing operations (LTRO)

The ECB announced a 10 basis point rate cut of its main refinancing rate, cutting to 0.15 percent, from 0.25 percent. More significantly, the Bank cut the deposit rate into negative territory for the first time – to -0.1 percent from 0 percent. The marginal lending facility rate was cut by 35 basis points from 0.75 percent to 0.4 percent.

Further monetary easing

Draghi has announced that, If required, further monetary policy easing is possible and that the ECB is unanimous in its commitment to using other unconventional instruments within its mandate. Negative rate will also apply to excess reserve holdings and certain other deposits held with the Eurosystem. The Eurosystem will consider purchasing simple and transparent asset-backed securities, while the ECB’s Securities Markets Programme sterlisisation has been suspended,

EUR/GBP is currently trading at GBP0.8068, down 0.7 percent on the session so far, under heavy selling pressure on Draghi’s comments.