Race for ECB vice presidency heats up

[Ben Graham]

As the euro gradually loses ground against the US dollar, Lithuania yesterday joined the contest for the vice-presidency of the European Central Bank. Former finance minister Rimantas Sadzius has been added to the list of candidates.

The finance ministry said in a statement published on Tuesday ahead of the January 9 application deadline that his long experience as finance minister, particularly during Lithuania's entry into the euro area in 2015, was invaluable and should be applied at the European level. Sadzius led the Baltic country's preparations for adopting the euro. Between terms as finance minister, he served on the European Court of Auditors before returning to Vilnius to head the ministry for a third time in 2024.

Luis de Guindos is due to leave his post at the end of May, upon completion of a non-renewable eight-year term. Croatia, Estonia, Finland, and Latvia have already declared their intent to nominate candidates, and Portugal may also enter the contest. In the past, the ECB vice-presidency has been held by representatives of France, Greece, and Portugal. Media reports say Croatia is backing Boris Vujcic, while Portugal has expressed readiness to support Mario Centeno.

Although the eurozone has included Eastern European countries for nearly two decades, and they now account for one-third of the 21-member currency union, a representative from the former communist bloc has never occupied a seat on the Executive Board.

Sadzius said that a strong euro was among the most important guarantees of both economic prosperity and European security, underscoring the ECB's significance, and he added that Lithuania had learned from other European countries and was now in a position to share its experience and expertise.

Eurozone finance ministers are expected to decide on de Guindos's successor at their meeting in Brussels on January 19. Terms for three other members of the Executive Board, including President Christine Lagarde, expire at the end of 2027.

The technical outlook for the EUR/USD pair suggests that buyers should consider reclaiming 1.1715. That would open the way to test 1.1740. From there, a move to 1.1765 would be possible, though doing so without support from major players could prove difficult. The extended target is the high at 1.1800. On a decline, look for significant buying interest near 1.1670. If no buyers appear there, it would be prudent to wait for a new low at 1.1640 or to open long positions from 1.1616.

As for the GBP/USD pair, its buyers should aim to capture the nearest resistance at 1.3500. That would allow a move toward 1.3530, above which a breakout would be challenging. The extended target is the area around 1.3560. If the pair falls, bears will attempt to seize control at 1.3470. A break of that range would deal a heavy blow to bullish positions and could push GBP/USD down to 1.3440, with scope to extend to 1.3415.

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