GBP/USD
The past few days the rate has been particularly stagnant, with the rate only printing minimal movements throughout trading sessions. This may signify that the Pound is finally trying to stabilize and halt the current downwards trend it is riding. This comes after a very rough past few weeks for the Pound, bought on by disappointing Bank of England statements regarding UK GDP growth forecasts coupled with high levels of uncertainty throughout the UK economy. With this essentially acting as an anchor for the rate, pulling it down to record lows, it is unclear whether this downwards trend will prevail. As it stands, many analysts predict that the outlook for the Pound is still largely negative and that any gains on its front will be short lived. As for the Dollar, its recent upwards momentum has run out of some steam but will likely resume as the demand for the Greenback remains a very prevalent factor in the market. For trading today, the economic calendar for the Pound is empty meaning that it may once again fall victim to the Dollar. In the States, some Fed members are expected to deliver speeches which may result in additional Dollar side strength if what they say is deemed favourable by investors.
GBP/EUR
So far today the rate has printed a slight decline, pushing it ever closer to breaching the recent lows we experienced and falling to levels not seen this year. The rate continues to edge slightly lower day-by-day as the Euro is bolstered by the prospect of their central bank beginning to look at rising interest rates. One ECB board member stated that there should be up to three interest rate hikes by year-end in order to combat record breaking inflationary levels. With the ECB previously opting to take a dovish approach to the whole rate hike situation, any deviation from this will likely reward the Euro quite strongly. As for the Pound, it is still licking its wounds from the knockback it got from the BoE peeling back their expectations of UK economic growth. With the outlook for the UK economy in a particularly negative state following these recent events, it may be likely that the Pounds weakness is present for quite some time. As for trading today, important reports on economic sentiment are expected from the Eurozone and with nothing of importance from the UK, the rate may dip lower throughout the day.
Morning update published by Frank Brightman (10/05/2022)