Market subdued due to US bank holiday
Tuesday 21 June, 2022
Daily Currency UpdateYesterday was a very quiet day in FX markets for the first time in a while. GBPUSD traded in a narrow range of around 1.2220 and 1.2280 throughout the day as there were no major data releases and the US public holiday saw thinner than usual trade.
GBP has recently recovered after dipping under 1.20 last week versus the US dollar. Despite the Bank of England underwhelming markets with a 0.25% hike in interest rates, the prospect of more to come is propping up the pound even if the tightening will likely be quite controlled. An article in the FT stated that 50 senior executives from finance, business and policy making expect an economic downturn, possibly in Q2 and Q3 of this year, so we could already be in the midst of it, however we will not know for sure until the data is released later in the year. Given the headwinds of high inflation, supply chain issues, and legal battles with the EU, the Paris based OECD forecasts economic growth of zero for the UK in 2023. So we could be entering a period of economic flatlining at best if they are correct.
Key MoversEuropean Central Bank chief, Christine Lagarde, warned yesterday that the risk of abrupt correction on Europe’s housing and financial markets is high in one of two speeches she gave yesterday. “While the correction in asset prices has so far been orderly, the risk of a further and possibly abrupt fall in asset prices remains severe," she said. She didn’t discuss monetary policy at either of the speeches so EURUSD remained fairly rangebound.
- GBP/USD: 1.2240 - 1.2335 ▲
- GBP/EUR: 1.1625 - 1.1715 ▲
- GBP/AUD: 1.7560 - 1.7670 ▼
- EUR/USD: 1.0490 - 1.0580 ▲