Central banks across Europe pause for breath
Daily Currency Update
Last week in Europe saw the release of CPI data which came in at 5.2% with Core CPI at 5.3% which was just shy of expectations. The Eurozone also finished off the week with poor PMI data.Later today there will be a speech from European Central Bank President, Christine Lagarde, as the markets await forward guidance after the recent interest rate increase which brought rates to a record high in Europe. The ECB’s decision to lift its deposit rate for the 10th consecutive time, by 25 basis points to 4 percent, came as officials cut their growth forecasts for the eurozone economy. She will likely mention the next plans for the European Central Bank to combat inflation. Following the recent interest rate hike from the ECB we have seen the Euro strengthen against the Pound.
As evidence mounts that global economic activity is slowing, economists, financial markets and most central banks have become convinced that no further interest rate rises will be needed.
Key Movers
Last week policymakers in the US, UK, Japan, and Switzerland all decided to keep rates on hold, whilst pressures still remain from higher oil prices and economic cracks.It was a bad week for the Pound last week across the board as it lost ground against both the Euro and US Dollar. Against the Euro it lost 1.02%, while against the USD there was a swing of 1.44%. These moves were seen as the Bank of England somewhat unexpectedly decided to hold interest rates at 5.25%, rather than another increase.
This could well see the end of the tightening cycle by the Bank of England even though the vote was only 5 to 4 in favour of a pause.
Expected Ranges
- GBP/USD: 1.22244 - 1.22501 ▲
- GBP/EUR: 1.14743 - 1.15073 ▲
- GBP/AUD: 1.89376 - 1.90728 ▲
- EUR/USD: 1.06389 - 1.06554 ▲