What can we expect from the European Central Bank meeting?

With the European Central Bank (ECB) meeting in Frankfurt looming, investors are intent on uncovering any indication of what lies ahead.

Specifically, the ECB’s €2.3 trillion ($2.7 trillion) bond-buying program is set to be re-assessed at the Governing Council policy meeting.

Amid a rally of the Euro in recent weeks, the ECB are expected to address the currency bounce, leaving currency traders on edge ahead of tomorrow’s verdict.

Thanos Vamvakidis, a senior foreign exchange strategist at Bank of America Merrill Lynch, agreed the ECB had to comment on the Euro.

“They’re already below their [inflation] target, they have to acknowledge there are further downside risks to their inflation outlook because of the strong euro.” He said in comments to the Financial Times.

Marie Owens Thomsen, chief economist at Indosuez Wealth Management, agreed:

“The ECB’s update of their forecasts will be very important for gauging the likely evolution in policy. The forecasts might reveal to what extent the ECB thinks that the stronger external value of the euro will impact GDP and inflation.”

Nevertheless, analysts expect the ECB may favour a weaker Euro, and thus the meeting may be used as an opportunity to talk down recent rallies.

On Friday, Ewald Nowotny, a member of the governing council, warned against over dramatising the appreciation of the euro, which traded at close to the $1.40 mark back in 2014.

“Since the introduction of the euro, there were significant movements of the euro-dollar rate. We’re now roughly where we were when the euro was introduced,” he said in Alpbach, Austria. “Therefore, I wouldn’t over-interpret or dramatize.”

Across the year, the Euro has gained more than 13 percent against the U.S dollar, and 8 percent on the Pound sterling, benefiting from political uncertainty in both countries.

There has been some indication from European Central Bank head Mario Draghi of some postponement on any major move towards on tapering its stimulus programme until October, however, given his comments back in June.

The ECB’s governing council is set to announce its monetary policy decision at 12:45pm UK time, followed by a press conference by president Mario Draghi at 13:30pm.