The euro extended its slide against sterling on Monday, after falling about 1.7% over the past two weeks, with focus fixed on France’s fiscal position. EUR/GBP was trading just above 0.8450 after failing near 0.8490 on Friday, leaving the 16-month low at 0.8447 close by. Pressure on the single currency has tracked a widening premium on French risk: the spread between the 10-year French OAT and the German Bund rose to 137 basis points, the widest since the 2012 financial crisis, as markets factor in political gridlock and social unrest ahead of next year’s presidential election.
Upcoming Central Bank Events And Key Economic Data
This week’s diary turns to central bank communication and UK data, although liquidity is expected to be thin during a long weekend in Japan and a partial US holiday. ECB President Christine Lagarde is due to speak in Bangkok on Wednesday, with attention on any signal about the timing of the next interest rate hike. In the UK, August GDP and Industrial and Manufacturing Production figures are scheduled for Thursday, as markets monitor whether they align with recent hawkish messaging from BoE officials.
Central Banking Framework And Policy Tools
Separately, the article reiterates the standard framework of central banking, including the use of policy rates to steer inflation towards 2%, and the distinction between monetary tightening, monetary easing, hawks and doves, as well as blackout periods before policy decisions.
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