EUR steady ahead of ECB meeting - BBH

EUR/USD pared back some of yesterday's gains but is holding above 1.1700, BBH's FX analysts report.

Lagarde's guidance in focus as ECB holds

"The ECB is widely expected to keep the policy rate unchanged at 2.00%. With no new ECB economic projections released at this meeting, President Christine Lagarde's post-meeting press conference will be key for policy insights."

"In our view, the bar for more ECB interest rate cuts is high which is EUR supportive. First, Eurozone services inflation still has some distance to travel to make sure that inflation stabilizes at the target on a sustainable basis."

"Second, the Eurozone July PMI suggests private sector economic activity is slowly picking up pace. The composite PMI rose more than expected to an 11-month high at 51.0 (consensus: 50.7) vs. 50.6 in June driven by faster services sector growth momentum (51.2 vs. 50.5 in June) and a slower contraction in manufacturing activity (49.8 vs. 49.5 in June)."