ECB - 12-month rate cutting cycle comes to an end

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waterman
Written by Dan Waterman
July 24th 2025
Huge European update today..

First up then and as expected, the European Central Bank (ECB) have kept its interest rate unchanged for the first time since June 2024.

ECB President Lagarde hasn't ruled out future cuts, but confirms inflation is stable (and shock of it is firmly behind them) and economic growth is currently better than baseline.

'If geopolitical tensions tensions were to lift, it would spur economic activity' says Lagarde.

This is a big moment because the ECB's interest cutting cycle has ended and the UK's is only just beginning. And once trade tariffs are confirmed and IF/when they go in the favour of the EU, the Euro is in a seriously strong position versus both the Pound and US Dollar (after already being at multi-year highs versus both).

More good news for the Euro-Zone came from July's PMI results which saw impressive results to start the second half of the year. Notably; manufacturing output is finally out of a long recession and the overall PMI result beat expectations and have hit an 11-month high.

In contrast, the UK's reading wasn't very good at all..

The overall result easily missed expectations (51 v 51.8) and lower than the previous month (52). But it was the all-important services number that caused real concern. A reading of 51.2 was expected to be 53 this month (52.8 previous), leaving investors once again nervous over the Pound.

Elsewhere, European Commission President Ursula von der Leyen, confirmed she had an 'excellent' meeting with Chinese President Xi today. Supposedly, it was an 'intense' dialogue on their trade relationship but no details of what was discussed was offered to the public. Interesting timing with the US-EU trade deadline once again looming.

Euro stocks have rallied and so has the Euro on the news of today.