Euro Rallies to New Highs

The euro pulled back yesterday ahead of Thursday’s ECB meeting. Sterling-euro regained 1.1300 and euro-dollar fell back towards 1.1500 from a high around 1.1580 the previous day.

Previous Day's Market Highlights

The euro pulled back yesterday ahead of Thursday’s ECB meeting. Sterling-euro regained 1.1300 and euro-dollar fell back towards 1.1500 from a high around 1.1580 the previous day.   
With little out on the calendar, sterling traded relatively sideways against the dollar. US Housing Starts and Building Permits surprised to the upside but had limited impact on the dollar’s strength against the pound or the euro, against which it was already making headway.
Overnight, the Aussie traded in both directions, ultimately weakening against the pound, after the release of June employment data, which saw fulltime employment pick up, while the Unemployment Rate was 5.6%. 

Today's Market Highlights

Gains in Retail Sales as forecast could give the pound a boost this morning (09:30 BST). Both the monthly and annual figures are projected to pick up. However, should the data surprise to the downside, this would likely add to the pressure already seen on the poundthis morning.
The main event of the day is this afternoon’s ECB interest rate decision (12:45 BST) and subsequent press conference (13:30 BST). The ECB is expected to keep policy on hold this month but traders will watch for any clues as to the timing of the winding down of stimulus. Markets are expecting more explicit guidance to come in September.
The press conference is typically the main source of volatility. If ECB President Draghitakes a more cautious view to offset high market expectations, the euro could weaken. If he does not, the euro may instead strengthen.