ECB meeting the focus today

The focus for markets today will be the ECB’s latest policy meeting, which will have to hand updated staff macroeconomic projections. They may show some upward revision to the growth outlook, given the strong momentum  in the economy, though the forecast for inflation – which the last set projections showed still running below target in 2020 – may be largely unchanged with the impact of higher oil prices countered by the appreciation of the euro

The ECB is likely to reiterate its policy position that asset purchases (QE) will continue until September at least, and that interest rates will remain at their current level until well after QE ends. However, given that the short-term prospects for the economy are good, the ECB might drop its guidance that QE could be increased if the outlook ‘becomes less favourable’

The EU has published draft negotiating guidelines for a new relationship with the UK. The EU Council President, Tusk, noted that, as the UK has said it will leave the Single Market and the Customs Union, the only remaining possible model is a free trade agreement, which he says will aim to cover ‘all sectors and with zero tariffs on goods…and should address services’

Sterling is little changed against the euro, trading a little over 89p, while the single currency continues to hover just above $1.24 against the dollar

Data due today includes jobless claims in the US