GBP/USD
Yesterday, the Sterling-Dollar rate swooped down to fresh 2-week lows as the Pound struggled to fight against intense downwards pressure. This downwards pressure was sparked following the Bank of England Governor Andrew Bailey’s sobering assessment of the U.K. economy in his speech yesterday. He stated that the BoE is now seeing signs that the U.K. economy is at a turning point and starting to slow down, with inflation still forecasted to go even higher. This, of course, weighed on the Pound as recessionary fears were once again resurfaced as a result. The Dollar, on the other hand, did manage to come out relatively unscathed following Federal Reserve Chair Jerome Powell’s speech. He voiced his concern for the current inflationary situation over in the States, stating that the Fed will continue to prioritise their inflation fight. This hinted at future hawkish interest rate hikes being delivered by the Fed, providing a plump boost for the Greenback. As for trading today, the rate has so far been rather stagnant, with it only printing minimal movement. Investors will however pay very close attention to data from the U.S. later today regarding price indexes. However, much like the Pound, a chunk of the Dollar’s upwards potential is likely to be capped by the current recessionary fears driving the market.
GBP/EUR
In recent days, the Sterling-Euro pair has managed to climb out of its recent drop, erasing a large portion of this week’s losses. Although both currencies are currently dealing with issues of their own, the Pound has been able to capitalise on the Euro’s downwards movement following the events that occurred yesterday. To go into more detail, the European Central Bank’s President, Christine Lagarde, disappointed investors in her speech yesterday as she did not provide much material regarding interest rate hikes. Coupled with recent data from Germany indicating an unexpected rise in their unemployment rate, recessionary fears are beginning to pile up against the Euro. However, these recessionary fears are also acting on the Pound, with the BoE’s Governor Andrew Bailey warning of a U.K. economic downturn, limiting the currencies upwards movement. For trading today, the Euro will have a chance to claw back some of its losses as Christine Lagarde is set to deliver another speech, which will be closely listened to by investors.
Morning Update published by Frank Brightman (30/06/2022)