KBC Market Research Desk
KBC Bank
Currencies
EUR/USD remains trapped within a narrow trend channel. A break higher would probably require improving European data.
The pound sterling further erased pre-election gains as markets shifted focus to the potential difficult trade talks with the EU. The move ran into resistance near EUR/GBP 0.86. The Bank of England might decide over sterling’s near term future by the end of this month.
USD/JPY settled above 110 amid an overall constructive sentiment. The fall-out of geopolitical tensions at the start of the year on USD/JPY (rising yen) proved very short-lived.
The Czech currency enjoyed a nice bid on the back of improved sentiment, a solid economy and relatively high interest rates. EUR/CZK 25.00/15 is key support.
The Hungarian forint remains close to historically weak levels. High inflation (4%) turns real interest rates negative, hurting the currency.
Polish zloty rallies as markets bet the central bank will raise rates sooner than later with inflation running high. EUR/PLN 4.24 is an important technical reference.
This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.
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