Stronger euro raises pressure on ECB

The renewed surge in the euro to all-time highs against the US dollar and sterling has intensified concerns about the prospects for the industrial and external sectors. The tradeweighted euro is almost 10% higher than on a year earlier and now appears consistent with annual falls in exports. The ECB’s sanguine attitude to the euro’s strength in the past suggests that the latest developments will not lead to imminent cuts in interest rates. But it provides another reason to think that the ECB will switch to easing mode before too long.