Pound hits 16-month high against euro on rumoured ECB rate cut package

 
Harriet Green
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The European Central Bank (ECB) is working on a package of policies for its June meeting, which include cuts to all its interest rates and measures aimed at upping lending to small and medium-sized firms, Reuters reports.

A rate cut in June is “more or less a done deal”, one of the news agency’s sources sources said.

European markets are in the red this morning, and the pound has hit its highest level against the euro in 16 months, at €1.2297 - that means a euro’s worth 81.3p.

According to Reuters' sources, the plans involve a potential rate cut, which would see the ECB’s deposit rate going fall into negative territory for the first time.

Markets have been buoyed over the last few days by the suggestion that the ECB will be easing its monetary policy at its meeting next month.

The measures would provide some stimulus to the Eurozone economy, although they won’t be as pervasive, in terms of effect, as a major programme of quantitative easing.