EURUSD falls as ECB could pause
As a rate hike in September could be off, the euro is on a downward trend. The ECB chief economist’s optimism that inflation was easing might weigh in amid growing arguments for a policy pause. After nine successive rounds of tightening policymakers find themselves at a crossroads. With interest rates at two-decades highs, and growth stagnating for the last three quarters, they are at a critical juncture. The inflation rate is still persistent because the price pressures are stubborn, and wages continue to rise. If the central bank lowers its forecast of price growth, then the currency may fall below 1.0650. The first overhead resistance is at 1.0940.
GBPUSD declines as economy remains fragile
The pound dropped to a 3-month low, as traders placed their trust in a stronger US economic outlook. Although market participants are expecting a quarter-point increase in interest rates at the BoE meeting later this week, and possibly another by the end the year, a narrowing differential of rate may not allow Sterling to catch up with greenback. Dollar’s resurgence is being driven by the US economy, and this could add pressure to weaker currencies. The pound has been one of the weakest currencies in recent years due to…