Euro zone inflation rose slightly to 2% in June, according to flash data from statistics agency Eurostat on Tuesday, meaning consumer prices in the single currency area are now in line with the European Central Bank's target of 2%.

Consumer prices in June were 2% higher than the same month last year, up from the 1.9% of May, lifting expectations that policymakers will leave the key interest rate unchanged later this month.

Having cut rates at its June meeting to 2 per cent we think the European Central Bank is now likely to pause in July. With inflation on target in June the latest data offers little reason to think that trajectory has changed.