All eyes shift to the BoE
Daily Currency Update
The Federal Reserve kept rates unchanged in last yesterday’s FOMC meeting, Fed Chair Jay Powell voiced that he is against the idea of a March rate cut during the press conference.As far as the statement was concerned, the reference to possible additional rate hikes was diminished, while in its guidance the central bank stated that it does not expect it will be appropriate to cut rates until there is greater confidence inflation is moving sustainably towards 2%.
During the press conference, it was surprising that Powell mentioned a March rate cut was unlikely. Having seen the Fed diminish market expectations of a March rate cut, today we will receive the latest figures from the Bank of England, where the rate of UK inflation is slightly more elevated, although is still slowing sharply.
The December uplift in UK inflation to 4% serves to highlight the challenges facing the Bank of England in returning inflation to its 2% target.
Key Movers
This week, the pound-to-euro exchange rate could break to new multi-year highs or fall back below the 1.17 level again. The prospect of the best levels since early 2022 for Euro buyers means a lot is riding on today's Bank of England decision, which comes as the exchange rate tests the resistance zone between 1.17 and 1.1775.EUR/USD has just broken the 1.08 resistance level following the FOMC rate decision, this can be attributed to a weak Euro after narrowly missing a technical recession on Tuesday. The markets now await CPI and PMI from the Eurozone, any surprises could see EUR/USD test 1.0750.
Expected Ranges
- GBP/USD: 1.26422 - 1.26979 ▼
- GBP/EUR: 1.17224 - 1.17358 ▲
- GBP/AUD: 1.92841 - 1.92841 ▲
- EUR/USD: 1.07798 - 1.08219 ▼