Pound Euro exchange rate: GBP/EUR slumps as European Central Bank announces fresh stimulus package

Inflation has begun to fall, the continent is feeling the effects of the trade war between China and the US, and Germany, Europe's largest economy, has been teetering on recession. It would first cut in interest rates from a negative 0.4% to minus 0.5%.

The ECB also eased the terms of its long term loans to banks and introduced a tiered deposit rate to help banks.

Factory output has slumped in response to diminishing global trade volumes as Washington and Beijing impose punitive tariffs on each other's goods, while business investment has fallen against the uncertain political backdrop.

Neil Wilson from Markets.com said: 'This was a kitchen sink job but the European Central Bank has kept a just a tiny bit back in the tank in reserve.

"The Governing Council now expects the key European Central Bank interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2per cent within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics", the European Central Bank said.

Chief economist at ING, Carsten Brzeski, said 'Despite all market excitement now, the question remains whether this will be enough to get growth and inflation back on track as the real elephant in the room is fiscal policy.

European Central Bank cuts rates by 10bps, in-line with market expectations, announces new QE program.

The ECB's support for the eurozone economy comes at a tense political moment as Donald Trump attempts to apply pressure on the US Federal Reserve to cut interest rates as the American economy falters.

Thursday's decision sent the euro below 1.06 versus the US dollar, where it is on track to close at its lowest level since May 2017. And the Fed sits, and sits, and sits.

Draghi said that eurozone countries with solid public finances should increase their spending to reboot economic growth, after years of monetary policy support from the central bank.

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