Home Daily Commentaries Markets await Jerome Powell’s Jackson Hole Statement

Markets await Jerome Powell’s Jackson Hole Statement

Friday 26 August, 2022

Daily Currency Update

GBP is mostly being driven by external factors, namely USD and the Jackson Hole Symposium this afternoon. This morning it was announced that millions of households across the UK will face an unprecedented 80% rise in their energy bills in October, meaning a typical bill will cost around £3,549 a year. Sterling is on the backfoot already, fallen against both USD and EUR.

Key Movers

The ECB minutes released yesterday did not give markets any more information. However, concerns around a weak Euro has become a key theme. With a number of ECB speakers in the calendar next week, mentions on this subject will be an interesting listen. The ECB’s ability to offer solid support for the shared currency seems limited though with persistent high energy costs. The main focus of today and the week is the Jackson Hole Symposium, with Fed Chair Jerome Powell’s key-note speech at 3pm UK time. Comments yesterday gave us some insight into the Fed’s thoughts, as expected they seem to remain hawkish on inflation. James Bullard suggestion rates should be raised to 3.75-4% by the end of 2022. Esther George also said high inflation warrants more hikes. Powell’s speech with by closely watched for mentions of inflation, growth outlook, front-loading rate hikes and any hint at easing in 2023. An aggressive stance should support the USD rally we’ve seen recently, with the downside risks for the dollar will be hints at slower rate hikes and alarming tone on recession.

Expected Ranges

  • GBP/USD: 1.1700 - 1.1920 ▲
  • GBP/EUR: 1.1745 - 1.1900 ▼
  • GBP/AUD: 1.6920 - 1.7080 ▼
  • EUR/USD: 0.9880 - 1.0180 ▲