The pound fell against all major currencies with a drop of 1.1% against the USD and 1% against the euro last week. We have the Bank of England policy meeting on Thursday where we will have the decision on whether the bank will raise rates or hold at 0.1%. Just last week the GBP-EUR hit 1.19 and now we are down to 1.1750; GBP-USD followed the same pattern. The market priced in a rate hike of 0.25%, which potentially overinflated the pound. The drop suggests that investors are changing their expectations of a rate hike this week.
Later in the day we have the Federal Reserve’s interest rate decision. The US Dollar is on a hot streak and could continue if we get a hawkish tone from the Federal Reserve. The bulls aren’t expected to start until 2022, combine that with whispers of an end to quantitative easing next year and we could see EUR-USD break below 1.15.
In other news, there could be signs that supply chain issues are starting to ease. GXO Logistics Inc is starting to see more cargo arriving at its facilities. As it is the largest contract logistics provider in the world, it is worth noting. Hopefully container prices return to some normality sooner rather than later.
Have a nice day.
Josh Saunders, Senior Relationship Manager.
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