- EUR/GBP bulls capped at the day´s highs ahead of key central bank meetings.
- Eyes are on the BoE, UK data and the Fed.
EUR/GBP is up some 1% on the day but is running into offers at the high of 0.8840. The British Pound came under pressure ahead of the Federal Reserve and Bank of England (BoE) which are both due to meet this week.
Interest rate expectations have shifted dramatically during a tumultuous few weeks in financial markets owing to the risks of contagion in the banking sector. First of all, the Federal will announce its next rate decision on Wednesday, while the Bank of England will convene on Thursday.
As of Tuesday morning, markets were pricing in a 44% chance of no change from the Bank of England, and a 56% chance of a 25 basis-point increase. We will have the United Kingdoms' inflation data on Wednesday also and traders will be looking to this for prospects of some easing.
Analysts at TD Securities say that headline inflation likely fell 0.2ppts in March, in line with the MPC's forecast, on the back of another decline in petrol prices. ´´A shortage of certain vegetables and fruits adds some upside risk to the print. We also expect a rebound in hotel prices and continued strong core goods momentum to keep core inflation elevated.´´
Meanwhile, the Federal Reserve is expected to hike but maybe just 25bp, taking the Fed Funds rate to 4.75%-5.00%. There will also be the dot plot and the post-meeting communication is likely to emphasize that the Fed is not done yet in terms of tightening.
Analysts at TD Securities argued that the officials will likely be flagging the more uncertain economic environment.
´´Treasuries will react to the Fed's messaging around future hikes and the dot plot. Any hint that the Fed will stop hikes due to stability worries could create an outsized market reaction,´´ the analysts said. ´´Messaging and dot-plot will be critical. Our base case is hawkish which poses a risk that STIR vol persists, (The short-term interest rate (STIR) analytics)´´
|Today last price||0.8814|
|Today Daily Change||0.0081|
|Today Daily Change %||0.93|
|Today daily open||0.8733|
|Previous Daily High||0.8773|
|Previous Daily Low||0.8728|
|Previous Weekly High||0.8864|
|Previous Weekly Low||0.8718|
|Previous Monthly High||0.8979|
|Previous Monthly Low||0.8755|
|Daily Fibonacci 38.2%||0.8745|
|Daily Fibonacci 61.8%||0.8756|
|Daily Pivot Point S1||0.8717|
|Daily Pivot Point S2||0.87|
|Daily Pivot Point S3||0.8672|
|Daily Pivot Point R1||0.8761|
|Daily Pivot Point R2||0.8789|
|Daily Pivot Point R3||0.8806|
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.