Pound pushes higher as Bailey warns of more rate hikes
Tuesday 28 March, 2023
Daily Currency UpdateGBP/USD has continued to push higher over the past 24 hours, buoyed by a rebound in equity markets as concerns over the banking sector continue to dissipate. As well as the calming of financial markets, Governor of the Bank of England Andrew Bailey's comments in a speech at the London School of Economics last night will have also added support to the sterling. Bailey commented that he was not concerned about British banks describing them as being "resilient with robust capital and liquidity positions." Despite several US banks failing over recent weeks and Switzerland changing its laws to allow UBS to buy Credit Suisse at a huge discount, UK banks seem to have avoided the headlines for the most part. Bailey also stated that the BoE was prepared to push interest rates even higher if inflation didn't start to come down. A lot of attention will now be paid to the next CPI print from the UK due April 19th after March's surprise uptick to 10.4% from 9.9% y/y. It’s another busy day for the BoE Governor with him and his deputy, Dave Ramsden due to discuss the collapse of Silicon Valley Bank before the Treasury Select Committee in Westminster. GBP/USD has managed to get above 1.23 with GBP/EUR around 1.1375 after touching 1.14.
Key MoversWith global equity markets rising the safe haven dollar has sold off in the past 24 hours with EUR/USD back above 1.08. As mentioned before concerns about a new banking crisis potentially akin to the one in 2008 have faded and some stability has returned to the sector. Despite not promising to write a blank cheque to protect consumers US Treasury Secretary, Janet Yellen has spoken to reassure depositors their money is safe, and, for now, it seems her comments and some from Fed Chair, Jay Powell seem to have reassured the US public for the time being. The next major obstacle which could cause some volatility is Friday's inflation data from the Eurozone and the US. Eurozone CPI could be expected to fall with the underlying core number predicted to push a little higher. Later in the day, we have US Personal Consumption Expenditure, another gauge of inflation the US Federal Reserve pays particular attention to. All components of this release are expected to fall so any uptick could cause market jitters to re-emerge. Today sees the President of the European Central Bank, Christine Lagarde speaks at 2 pm in Frankfurt. EUR/USD sits at around 1.0820.
- GBP/USD: 1.2240 - 1.2400 ▲
- GBP/EUR: 1.1310 - 1.1440 ▲
- GBP/AUD: 1.8330 - 1.8500 ▼
- EUR/USD: 1.0750 - 1.0880 ▲