Tension in the Middle-East may speed up Fed rate cuts
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Daily Currency Update
The recent attack by Iran on Israel has led to a deteriorating situation in the Middle East. This could potentially harm the US economy and may prompt the FOMC to accelerate the interest rate cuts that were previously postponed.The Fed is currently facing a significant increase in volatility that is being driven by the data, which indicates that there is still considerable inflationary pressure in the economy. This pressure is a result of the strong employment data and persistent supply chain issues.
Key Movers
New data, released on Friday, shows that the economy expanded for the second consecutive month in February. Although the Office for National Statistics may opt to wait for March data before making any conclusive statements, it seems likely that the economy has bounced back from the recession it experienced in December of the previous year. The base interest rate has remained unchanged since September of the previous year. It is speculated that the succession of rate hikes initiated in December 2021 has already been fully integrated into the economy, mitigating the risk of secondary inflation resulting from wage hikes associated with inflationary upticks.Expected Ranges
- GBP/USD: 1.2425 - 1.2495 ▼
- GBP/EUR: 1.1685 - 1.1745 ▲
- EUR/USD: 1.0605 - 1.0695 ▼