The pound, euro and US dollar all trading with notable volatility over the past fortnight, following the latest rate decisions from the Bank of England (BoE), European Central Bank (ECB) and Federal Reserve.
During this time GBP/EUR fell from almost 1.13 to a four-month low of 1.11, while EUR/GBP climbed to 0.89.
At the same time, GBP/USD slumped from 1.23 to 1.20, , and EUR/USD touched a nine-month of 1.10 before slipping to 1.07.
Central bank rate decisions inspire volatility in the pound, euro and US dollar
Staying on top of the latest currency news can help you time your transfers more effectively, so find out what you should be looking out for over the next couple of weeks…
A dovish assessment of the BoE’s first interest rate decision of the year sent the pound sharply lower over the past couple of weeks. While the BoE raised rates by 50bps GBP investors appear convinced the bank is nearing the end of its hiking cycle.
It was a similar story for the euro over the past two weeks. The ECB also opted for a 50bps hike, but undermined this after implying it will pursue just one more increase before pausing its tightening cycle.
Meanwhile, USD exchange rates witnessed some of the most volatile movement. After falling to a multi-month low in the wake of a dovish 25bps rate hike from the Fed, the US dollar skyrocketed as a bumper payroll print revived Fed rate hike expectations.
What do you need to look out for?
The UK’s upcoming GDP release will be a key focus for GBP investors over the next couple of weeks. The pound is likely to soar if the UK managed to avoid slipping into a recession at the end of 2022.
Meanwhile, the threat of an escalation of the war in Ukraine may cast a long shadow over the euro through the first half of February.
Across the Atlantic, the spotlight will be on the latest US consumer price index. Could a sharper-than-expected drop in inflation dent Fed rate hike bets?
Economic uncertainty has continued over the past two weeks, with surprising data releases and recession fears causing volatility in the currency market.
This has seen GBP/EUR move between 1.16 and 1.19, finishing just shy of 1.18, while EUR/GBP dropped down to 0.85.
Meanwhile, GBP/USD has clawed its way up from 1.22 to almost 1.26, while EUR/USD rebounded from 1.04 to 1.06.
Staying on top of the latest currency news can help you time your transfers more effectively, so find out what you should be looking out for over the next couple of weeks…
The pound staged a recovery over the past fortnight. Initially Sterling slipped to multi-month lows as the Northern Ireland protocol dispute and the cost-of-living crisis hammered the UK currency. However, much stronger-than-expected jobs and sales data helped the pound surge higher.
The euro also came under pressure as the Russia-Ukraine conflict showed signs of escalating. But upbeat eurozone GDP data and a hawkish tilt from the European Central Bank (ECB) helped lift EUR against many of its peers overall.
Meanwhile the US dollar started strong but began to weaken as the market mood improved. In addition, worries that the US economy could face some turbulence ahead hurt USD. US retail earnings spooked investors, while some economists fear that the Federal Reserve’s tightening cycle could end up being too aggressive.
The flash PMIs could cause some significant movement. A huge slowdown in the UK’s services sector may weigh heavily on the pound. In addition, the long-awaited ‘partygate’ report could create headwinds for GBP.
The eurozone’s flash inflation rate next week could boost the single currency. After a more hawkish tone from the ECB, an expected rise in inflation could further fuel rate hike bets.
USD investors will be looking ahead to the Federal Open Market Committee (FOMC) meeting minutes on Wednesday evening. Will policymakers have discussed a 75-bps rate rise?
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