GBP/USD
With the market opening today it is apparent that the recent trend of unresponsiveness has continued as the rate so far has only budged slightly upwards. This comes after the Pound has fallen significantly against the Dollar following an array of disappointing economic happenings, pushing the rate down to its lowest levels since June 2020. To add to the Pound’s struggle, the UK economic think-tank, the National Institute of Economic and Social Research (NIESR) gave a concerning statement with their outlook for the UK economy. In this they stated that they believe that Britain is on course to enter a ‘technical recession’ in the second half of 2022. This also correlates with the BoE’s recent statement which revealed their forecasts for the UK’s GDP to contract throughout 2022. Taking all of this into account, it is possible that the Pound will find additional pressure on it following these statements. As for the Dollar, it’s recent climb against the Pound has taken a slight breather but may resume shortly as markets await a vital data release later today. The data expected is both the Core Inflation Rate and Inflation Rate for the States. This will play a part in the Fed’s next interest rate decision meaning that the figures released will make for some volatility in the market later today. Looking back at the Pound, the UK does not have any important data releases today, but tomorrow is set to release significant data on GDP, until then the Pound may lack support.
GBP/EUR
The past few days there has not been much excitement within the rate, with it sticking closely to its current levels, sitting on the lowest levels we have seen the rate reach this year. Both the Pound and the Euro have paused momentarily likely in anticipation of a few economic events expected in the coming days. With it being a quiet day for the Pound, most of the focus is sitting on the speech from ECB President Lagarde very shortly. In this she is expected to announce the conclusion of their Asset Purchase Program, which could indicate that rate hikes are on the horizon. As for the Pound, most of the focus will be on the release of crucial GDP data early tomorrow morning. With the UK economy currently underperforming, these data releases will likely give some more clarity. Also, UK-EU trade relations are seemingly deteriorating recently, with Downing Street threatening to suspend parts of the Northern Ireland Protocol likely meaning that both currencies will be effected should the situation escalate further.
Morning Update published by Frank Brightman (11/05/2022)