GBP
The British Pound has been under pressure against the Euro for a few days now which may see further downside near term.
Although the Pound has remained relatively steady against the Dollar over recent days it has fallen 0.30% against the Euro this week, adding to last week’s 0.45% fall.
British consumer confidence inched up in July after seven straight months of decline, possibly reflecting the introduction of support payments for low-income households.
Today’s survey comes days after the Bank of England said Britain would enter a recession at the end of 2022 and gave a grimmer outlook for inflation, projecting consumer prices would rise more than 13% in October.
UDS
Today’s July US CPI report will attract a lot of attention, particularly after last Friday’s strong labour market report for July, which confounded expectations that the economy is already in recession.
Fed policymakers have said that they are looking for compelling evidence that inflationary pressures are easing before they change course on monetary policy.
However, this outcome would seemingly support the comments from officials that a further interest rate rise of at least 50 basis points is likely at their next policy update in September.
EUR
Last week, the European Union faced a new crisis when it was revealed eurozone inflation had skyrocketed to a record high, piling yet more pressure on the ECB as surging prices show no sign of slowing.
In July, eurozone inflation jumped to 8.9 per cent, up from 8.6 per cent in June and 8.1 per cent in May. The ECB has forecasted the rate to average 6.8 per cent in 2022 before falling to 3.5 per cent in 2023 and 2.1 per cent in 2024.
The Russian gas crisis has been a key factor, with supplies into Europe via the Nord Stream 1 pipeline shrinking and price pressures seeing growth in the German economy (the EU’s largest).
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