GBP/USD
Today we are benefitting from the surprise ‘juggernaut rally’ from the Pound yesterday, in which we saw the currency climb substantially against the Dollar. This likely came into fruition as investors bought into the yearly dip that the rate plunged to earlier that day, giving the pair enough impetus to pull itself up from where it was. To add to this, the Pound also likely found some secondary support as markets digested inflationary data released in the UK. The UK’s Office for National Statistics reported the UK’s Consumer Price Index (CPI) at 7%, much more than the forecasts of 6.7%. While the Core CPI landed at 5.7%, elevated from the estimates of 5.4%. With these record breaking figures, the pressure for the BoE to raise interest rates is increasing, hinting at a potential hike in their May meeting. At the time of writing, the current upwards trend is still continuing but is likely to run out of steam as the Dollar imposes fierce headwinds on this movement. Looking at the Dollar, it is also finding a comfortable amount of support in the markets expectations for their central bank to rise interest rates, as inflation in the States also reaches record levels. For trading today, the absence of important UK data may leave the Pound vulnerable Dollar, with the US set for some important data releases relating to consumer sentiment and retail sales.
GBP/EUR
So far today the rate has been rather indecisive, with it not making any notable movements as of yet. Despite this, it is still sitting in a very comfortable position as it benefits from the recent 4-day upwards trend. This was facilitated as the Euro did take a recent hit following more negative developments from Ukraine as the war grinds on and Russia facing fresh accusations of war crimes. However, the market has since lessened its focus on the war and its waiting in anticipation as it is a very important day for the European Central Bank. With their interest rate decision expected later today, some analysts are expecting that the ECB will take a slightly more hawkish approach as inflation in the Eurozone reaches blisteringly high levels. Limiting the upside to the Euro, the recent dovishness of the bank is still casting doubt over whether they will raise interest rates or leave them untouched, following their recent tone. With the announcement due around midday, the rate is unlikely to make too much movement before then.
Published by Frank Brightman (14/04/2022)