Category Archives: FX News

GBP

The British Pound started August with solid gains against both the Euro and Dollar but risks decline later this week as the Bank of England faces one of its toughest-ever interest rate decisions as UK heads toward recession.

The Bank of England will deliver its latest interest rate decision on Thursday against a backdrop of soaring prices and multiple warning signs that the UK is heading for a recession this year.

Rates are expected to rise again, by 0.25% or 0.5%, increasing costs for millions of borrowers
That gives the nine members of the Monetary Policy Committee a tougher job than perhaps any time since Gordon Brown made the bank independent of government in 1997.

USD

There are no major data releases today. However, in the US the June JOLTS survey of job openings and labour market turnover will provide further detail on employment trends.

The main monthly report for June that was released a few weeks ago showed employment growth slowing but overall, the message seemed to be that the labour market is still tight.

Meanwhile, US Federal Reserve policymakers at the back end of last week cited the economy is not in recession despite confirmation that GDP fell in the first half of 2022. They also remain concerned that labour market tightness may further fuel wage growth.

EUR

Eurozone unemployment remained stable at 6.6% during the month of June 2022 compared with the previous month, the EU’s statistical office Eurostat announced yesterday.

It has decreased by 1.3% compared to last year’s unemployment level as people go back to work after job losses during the COVID-19 pandemic.

The rates differ per EU country. Unemployment was highest in Spain and Greece at 12.6% and 12.3% respectively. The Czech Republic has the lowest unemployment rate in the EU at 2.4%.

If you or your company are impacted by currency risk please reach out to speak to one of our experts, we can assist with decision-making during this difficult time to help you protect your profits.

GBP

This week, the Bank of England will hold its latest monetary policy meeting. The BoE has raised rates at every meeting so far this year, bringing the Bank rate up to 1.25% in June.

 The door has been left open to a 50bps rate hike, an increase that three of the nine-strong MPC panel voted for in June.

GBP/EUR exchange rate rallied further to reach three-month highs last week but could struggle to advance further in the days looking ahead to uncertainty about the outcome of this Thursday’s Bank of England (BoE) interest rate decision.

USD

In the US, the more widely watched manufacturing ISM survey will be released. This is expected to record a decline in the headline index, from 53.0 to 52.5, which would be the weakest since June 2020.
US GDP contracted in both the first and second quarters of this year, though the falls were modest at 1.6% and 0.9% in annualised terms.

No doubt, this will only add to the debate about whether or not the economy is in recession.

EUR

German retailers ended the first half of 2022 with the sharpest year-on-year sales drop in nearly three decades, as inflation, the Ukraine war and the coronavirus pandemic take their toll, data showed this morning.

Retail sales in June decreased 8.8% in real terms compared with the same month last year, the biggest drop since the time series began in 1994, said the Federal Statistical Office.

Congratulations England, who won the European Women’s Football Championships yesterday at Wembley Stadium.

The Lionesses beat Germany 2-1 after extra time, securing the first major football tournament title for any England team since 1966.

Inspiration for a nation and future generations to come!

GBP

The British Pound overnight reacted positively against the Euro and Dollar in response to the Federal Reserve’s decision to raise interest rates a further 75 basis points.

The Fed decision was always regarded to be this week’s major market event with the decision to raise interest rates expected. Markets reacted positively to guidance that there would not be any acceleration in the pace the Fed intends to hike.

The Bank of England will almost certainly hike rates for a sixth time in August following data showing inflation in June surged to a 40-year-high of 9.4%.

USD

The Federal Reserve raised its key short-term rate by three-quarters of a percentage point for a second straight month last night in a bid to control soaring inflation, matching the largest increase since 1994.

Chairman Jerome Powell suggested the central bank could slow the pace of its rate increases in the coming months if there is evidence that tighter monetary policy is taming the worst U.S. inflation in four decades.

EURO

The Federal Reserve raised its key short-term rate by three-quarters of a percentage point for a second straight month last night in a bid to control soaring inflation, matching the largest increase since 1994.

Chairman Jerome Powell suggested the central bank could slow the pace of its rate increases in the coming months if there is evidence that tighter monetary policy is taming the worst U.S. inflation in four decades.

If you or your company are impacted by currency risk please reach out to speak to one of our experts, we can assist with decision making during this difficult time to help you protect your profits.

GBP

The Bank of England is looking closely for signs of how persistent inflation is likely to be as it prepares to decide next week whether to raise interest rates by half a percentage point, which would be its biggest increase since 1995.

The BRC’s measure of annual shop price inflation remains well below the Office for National Statistics’ broader consumer prices index, which showed annual inflation hit a 40-year high of 9.4% in June, led by a 9.8% leap in food and drink prices.

USD

Today, the highlight will be the Fed interest rate announcement, A 75bps rate hike is expected, for the second consecutive meeting. 

The post-meeting press conference will garner close attention also. In the run-up to today’s meeting conclusion, forex markets may be in a holding pattern, as investors keep their powder dry ahead of the announcement.

EUR

Surging European gas prices are likely to keep the Euro under as fears of a deep recession in the Eurozone over the coming winter.

Euro exchange rates fell sharply as European gas contract prices shot higher as it was revealed Russia would further throttle back gas supplies to European markets in retaliation for Europe’s support of Ukraine.

If you or your company are impacted by currency risk please reach out to speak to one of our experts, we can assist with decision making during this difficult time to help you protect your profits.