GBP/USD
Yesterday the rate took a slight battering, with the Sterling-Dollar pair falling quite steeply, all the way down to weekly lows. This came as the Dollar managed to regain some of its strength and claw back the losses it had recently experienced. The Dollar managed to do this despite a disappointing data release on consumer confidence, indicating a decline in confidence for the month of June. This was possible as the majority of the market’s attention is now on the speeches that are expected from both the Bank of England and Federal Reserve later on today. To go into more detail, investors are increasing their expectations of a hawkish commentary from Fed Chair Jerome Powell regarding their approach to interest rate hikes. However, recent data indicating that the U.S. economic growth will slow down is capping a large chunk of the Greenback’s gains. On the Pound front, the BoE’s Governor Andrew Bailey is also set to deliver a speech which will be closely analysed by investors. In this he is expected to talk about potential rate hikes and bringing price stability to the UK economy. Considering that UK inflation is currently perched above 9%, any talk regarding rate hikes is expected to have a significant impact on the Pound. In the meantime, the Dollar may find a chance to climb against the Pound should data on the US’ GDP growth rate be favourable.
GBP/EUR
To kickoff trading today, the Sterling Euro pair has narrowly escaped from its recent 4-day downwards trend in which we saw the rate trickle down to 2-week lows. The Pounds recent downwards movement against the Euro is predominantly down to renewed Brexit related tensions. This came as MPs recently voted in favour of legislation designed to override elements of the Northern Ireland Protocol. The bill saw heavy criticism from many, with fears of a possible UK-EU trade war. As for trading today, most of the market’s attention will be on the speeches from the European Central Bank and Bank of England later on this afternoon. As it currently stands, investors are anticipating comments from both of the central bank members regarding interest rate hikes, with both UK and EU inflation at record levels. Should either bank announce a hawkish approach to rate hikes, their respective currency will likely find itself with a plump boost.
Morning Update published by Frank Brightman (29/06/2022)