GBP/USD
Yesterday the Pound experienced some intense selling pressure as comments from the BoE’s Andrew Bailey rattled the currency. In his speech he said that they are beginning to see evidence of a slowdown in economic growth. This follows the recent trend of the banks dovish statements, causing investors to reevaluate their expectations of additional rate hikes. The Pound was able to recover some of its losses as the Dollars climb ran out of steam, but the rate still closed at a rather notable loss. Looking back to today, the rate has been rather jumpy but has now edged upwards slightly but this movement will be met with strong headwinds as the Dollars safety net will limit its losses. Recently, the Greenback has benefitted from comments from Ukrainian President Volodymyr Zelenskyy in which he said that he would not consider demilitarising Ukraine as part of negotiations with Russia, triggering investors to buy into the currency. On top of this, China announced a two-phase lockdown in Shanghai on Sunday as coronavirus infections continue to rise, helping the Dollar siphon more strength. As for economic data, markets will be able to digest a consumer confidence report from the US and the BoE’s Quarterly Bulletin later on today.
GBP/EUR
The Pound dipped substantially against the Euro yesterday following BoE’s Andrew Bailey’s sobering statement in which his reevaluated UK economic growth forecasts, essentially ruling out any hawkish actions in relation to interest rate hikes from the central bank. This resurfaced fears of how the UK will cope with the cost of living squeeze as inflation remains stubbornly high. As for today, the rate has continued its downwards trend so far with the Euro extending its gains as it benefits from a slight improvement in sentiment regarding the war in Ukraine. Peace talks between Russia and Ukraine are resuming in Istanbul today after more than a fortnight. Mr Zelenskyy also said he would be prepared to discuss Ukraine taking on the same neutral status as Austria and Sweden – but only after Russian troops withdraw. Should these negotiations result in de-escalation of some form the Euro is expected to jump quite substantially with the Pound potentially gaining some momentum alongside. Both the UK and Eurozone do not have many scheduled data releases of importance today, meaning the rate will predominantly focus on the result of these peace talks.
Published by Frank Brightman (29/03/2022)