Euro holds below 14-month highs before European Central Bank decision

Pound regains ground on euro following inflation-inspired losses

The prospect of reduced monetary stimulus has kept financial markets edgy, with investors sifting through clues to gauge how big central banks around the globe will unwind unconventional policy that have kept borrowing costs at rock bottom.

European Central Bank officials have been cautious about signaling any exit from its bond purchase program.

He said: "While we agree that - in light of the broad-based cyclical recovery in the eurozone - the decline in deflationary risks will eventually warrant a reduction in the amount of monetary stimulus from the current extraordinary level, ongoing weakness in inflation suggests stimulus is still needed".

Whilst Draghi did not directly set a time frame for the tightening of the ECB's now extremely loose monetary policy, he did assert that policymakers were "unanimously agreed" that such talks will, and should take place during the summer recess.

The ECB's monetary policymakers left interest rates and asset purchases unchanged at its latest meeting in Frankfurt today, but markets responded to Draghi's hint of tightening to send the euro above $1.157 against the U.S. dollar after earlier falling to nearly $1.148. Draghi reiterated that assessment on Thursday, while stressing the need for caution because of subdued price pressures.

European Central Bank President Mario Draghi continued to project a more dovish than expected outlook at the press conference following the statement issued earlier Thursday.

The next monetary policy meeting after September is scheduled for October 26.

Euro area annual HICP inflation was 1.3% in June, down slightly from 1.4% in May, mainly due to lower energy price inflation. While no immediate change in monetary policy is expected today, investors are hoping to gauge the ECB outlook for the autumn and steps the bank plans to take.

"We were unanimous in communicating no change to the forward guidance and also we were also unanimous in setting no precise date for when to discuss changes", Draghi told a news conference.

GBP Weakens on Brexit Talk Roadblock as French Claim; "We Want Our Money Back " French Finance Minister Bruno Le Maire has evoked the spirit of Margaret Thatcher after telling the United Kingdom "we want our money back" in the European Parliament. That is even though most analysts think the bank will have to taper off the purchases next year because it will start running out of eligible bonds to buy. On the one hand, the current positive cyclical momentum increases the chances of a stronger than expected economic upswing. In particular, an end to the bond purchases could mean more pressure on highly indebted eurozone members such as Italy, which are now paying very little to refinance their large debt piles.

If a rate is negative the bank will pay the ECB (rather than receiving money in interest).

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