GBP gains support back above 1.21 against the USD
Friday 17 March, 2023
Daily Currency UpdateIn a week where the pound had declined over 1.5% against the US dollar, sterling is ending the week back above $1.21, as fears of a banking crisis in the US eased after a group of big US banks announced a $30 billion rescue package for First Republic Bank in an effort to prevent it from becoming the third to fail in less than a week. Investors will now likely have their attention firmly on next week's key central bank meetings in the UK and US. The Bank of England is expected to increase interest rates by 25 basis points next week, before ending its current policy tightening cycle, while the US Federal Reserve will likely continue to raise rates to combat inflation, although at a slower pace.
Key MoversThe euro strengthened after the European Central Bank went ahead with a planned 50 basis points interest rate hike on Thursday despite banking turmoil, but the gains are likely to remain limited. ECB policymakers said the Euro Area banking sector was resilient and that they were monitoring current market tensions closely, while they stood ready to respond as necessary to preserve price stability and maintain financial stability in the region.
- GBP/USD: 1.2105 - 1.2185 ▲
- GBP/EUR: 1.1375 - 1.1425 ▲
- EUR/USD: 1.0675 - 1.0745 ▲