Home Daily Commentaries Major interest rate decisions will drive currency markets through this week

Major interest rate decisions will drive currency markets through this week

Conor Fleming
Written by
Conor Fleming

Conor Fleming

OFXpert

With 30 years of experience in the foreign exchange world, Conor spearheads initiatives to encourage businesses in Germany, Switzerland, and Austria to hedge their foreign currency risks with OFX.

| Tuesday 19 March, 2024

Daily Currency Update

This week, the euro is under pressure amidst markets paring back their expectations for interest rate cuts from the Federal Reserve. The euro area harmonized index of consumer prices at 3.1% for core prices. Inflation is falling but the ECB wants to see it lower before their first rate cut in early Summer.

The Bank of England meets this week, and they are likely holding rates as it's too soon to cut and they want absolute confirmation inflation is returning to 2% before they do. Markets will most likely remain rangebound before their announcement on Thursday. Borrowing costs in the UK remain at 5.25%.

Key Movers

The Euro will trade quietly this week ahead of interest rate announcements for the Bank of England and the Federal Reserve. Euro growth is being hampered by the German economy which is struggling to move out of a recession. When you combine this with expectations that the ECB will be the first Central Bank to cut rates it most likely will ensure that pressure remains on the single currency.

The Federal Reserve is also expected to leave rates unchanged this week. Markets presently expect 75 basis points of cuts from the Fed but if guidance suggests a hawkish stance because of inflation, we could see the Dollar move higher this week. Similar to other currencies we expect a quiet start to the week before a slew of economic data and interest rate policy decisions.

Expected Ranges

  • GBP/USD: 1.2640 - 1.2740 ▲
  • GBP/EUR: 1.650 - 1.1750 ▼
  • GBP/AUD: 1.9425 - 1.9525 ▼
  • EUR/USD: 1.800 - 1.0900 ▲

Written by

Conor Fleming

OFXpert

With 30 years of experience in the foreign exchange world, Conor first embarked on his financial career journey as a trainee dealer in BNP Paribas in the early 90s. His professional journey also took him to New York, where he assumed the role of Head of Sales with an Irish bank for a few years. During his tenure at both banks, he was invited to several interviews on Irish television to discuss market turbulence, the factors driving volatility and insights into what could be expected as events unfolded.