Markets brace for ECB meeting after Bank of Japan maintains stimulus

Pound to euro exchange rate

But they don't expect Draghi to provide the road map for the exit at Thursday's news conference, which will follow the regular meeting of the bank's 25-member governing council at the bank's Frankfurt skyscraper headquarters.

"Most sensible commentary is rightly pointing out it's doubtful Draghi will deliver anything tangible in terms of a tapering tomorrow", said Richard Franulovich, senior currency strategist at Westpac Banking Corp in NY, referring to ECB President Mario Draghi.

However, M&G fixed interest investment director Anthony Doyle says tapering of asset purchases, which he anticipates will be addressed at the September meeting, represents a reduction in the degree of monetary stimulus rather than a fast interest rate tightening cycle. The decisions were announced Thursday after a regular meeting of the bank's policy council.

The euro dropped to $1.1489 against the dollar on the news, losing some of the gains recorded in recent weeks.

Analysts think it's a near-certainty that the ECB, the monetary authority for the European Union's 19-country euro currency union, will start scaling back its 60 billion euros ($69 billion) in monthly bond purchases after their earliest termination date at the end of the year.

The ECB left its key interest rates and massive stimulus unchanged for an eleventh straight session, and also kept the forward guidance intact, thus retaining the downward bias on asset purchases.

However, Draghi denied that the central bankers had discussed adjusting the programme and said that central bank staff had not done any economic analysis on possible options for changing the stimulus programme.

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But we also think that Mr. Draghi will emphasize that European Central Bank is not complacent, and that its upbeat outlook for the economy is conditional on accommodative monetary policy, and the full implementation of the planned stimulus.

The highly anticipated European Central Bank meeting took place today with the announcement that interest rates would remain unchanged at the record low of 0.0%.

On the FTSE 100, EasyJet (EZJ) fell to the bottom of the index, down 6% at £13.33, despite the budget airline flagging profits would be higher than expected, at up to £420 million, but still below last year's £495 million.

They were lifted as oil prices held the near 2% gains they had made the previous session when falling USA crude inventories gave the market a lift ahead of a key OPEC meeting next week.

The ECB is expected to lay the groundwork for an autumn policy shift when it meets, after ECB chief Mario Draghi opened the door to tweaks in a speech in Portugal last month.

Strong UK Retail Sales Fail to Have Positive Impact on GBPUK retail sales figures for June may have clocked in better-than-forecast, but markets remain unimpressed with the overall outlook for the UK economy. The primary objective of the bank's stimulus efforts is to get inflation up to its goal of just under 2 percent.

The timing for annual inflation to reach around 2 percent will likely be around fiscal 2019, the bank said.

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