EURUSD rises as ECB may stay firm
The ECB’s policy normalization is causing the euro to rise. This week, the central banks will increase its key rate by 50 basis points. As policymakers continue to debate the pace of tightening, the central bank’s forward guidance will be the main driver of volatility. Officials claim that the rate outlook depends on data. A positive PMI and an easing of CPI last month could lead to speculation about rate hikes. Market split currently between 25 bps and 50 bps in March. So hawkish statements from the press conference could prompt participants to price aggressively. The pair is headed towards 1.1180 With 1.0780 As a source of fresh support.
GBPUSD remains steady as BoE raises 50bp
As the BoE meeting approaches, the pound falls. The dollar’s broader weakness does not mean that Sterling is in a better shape with UK inflation still in double digits in December. The BoE expects to raise its rate by fifty bps, then increase it by another 25 bp in March. What rattles traders is that Britain’s economy is more brittle than its US counterpart. A possible recession is likely, despite a milder warning from PMIs and GDP. There is a…
