European Central Bank's Draghi to tiptoe to stimulus exit

Pound to euro exchange rate

Hiscott added: "Could the possibility of starting a tapering of sorts as early as September derail the fragile positive growth sentiment we have seen recently?"

The Nordic region's biggest bank by market value fell after reporting second-quarter operating earnings below analysts' estimates, while Danske Bank retreated 1.4 percent after its quarterly earnings.

The euro is now at $1.15135, backing off slightly from Tuesday's $1.1583, its highest level since May 2016 but still maintaining gains of 3.0 percent since ECB President Mario Draghi's Sintra speech and comfortably holding above the 1.15 line breached on Tuesday.

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

The Euro has steadily gained against the Pound today, despite the largely dovish slant to the European Central Bank (ECB) meeting and the better-than-expected United Kingdom retail sales.

Kathleen Brooks, research director at City Index Direct, said: "The key takeaway from today's meeting is that a September taper announcement looks increasingly unlikely as the European Central Bank said that a "very substantial degree of accommodation is needed" to boost inflation, and that the ECB's QE programme will run until the inflation rate picks up". 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. ECB President Mario Draghi was rather vague in his rhetoric - with no "specific" developments but that there is still much "uncertainty" about the eurozone's future.

While Draghi is not expected to announce a change of policy today, he could attempt to manage expectations of the timing of a tapering of the ECB's stimulus package.

The ECB says it will keep purchasing 60 billion euros ($69 billion) per month through year end, and longer if necessary.

In short, like other central bankers before him, Mr. Draghi is trying to prepare the market for an exit without disrupting markets; usually, that is impossible.

The skyscraper headquarters of the European Central Bank beside the River Main in Frankfurt, Germany.

That hint did not come with the statement unchanged from the bank's June meeting.

Speculation was ratcheted up yet further when Draghi told a central banking conference late last month that "as the economy continues to recover. the central bank can accompany the recovery by adjusting the parameters of its policy instruments". The company said it expects full-year underlying operating margin to grow by at least 100 basis points, as against 80 basis points projected earlier.

Market watchers will focus on the bank's standing promise that it could increase the purchases in size or duration if the outlook worsens. The bank has said it won't raise its benchmark interest rate from zero until the purchases end.

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