Morning all
Hope you’re well and back to reality following last weeks events. Back to the exchange rates and our back pockets!
GBP
Midday today, all eyes on the interest rate decision. Chatter of a rise of up to 0.75%, the largest interest rate hike since 1989. Focusing purely on the reaction of GBP – anything less than a 0.75% rise expect GBP to drop off, 0.75% or above GBP will rocket higher. Something needs to be done to get us out of this horrendous rut and a lumpy rate hike could be just that to kick inflation into touch.
We are expecting a further 2% of interest rate rises this year so expect further hits through November and December.
EUR
They call it the doom loop…
High energy prices, no energy!, no tourism (until next summer) and poor weather. If we get a 0.75% rate hike as above, 1FX anticipates GBPEUR to rocket back up to the 1.18 level by Christmas. On the flip side, still very attractive levels if you have EUR’s to sell.
USD
I’m sure you’re bored of me telling you, however we are still teetering around 1985 lows. Why? Safe Haven currency. This is purely following Russia stating that it will mobilise 300,000 military reserves in an escalation of the war in Ukraine. This pushed USD 0.5% higher against all the majors keeping GBPUSD painfully low for us all. A recalibration of expectations is needed across the board for GBPUSD, with 1.30 now a distant memory.
If you wish to discuss anything in greater detail do not hesitate to get in touch!
Best
1FX