Throughout this week both GBP and EUR have outperformed the USD, until Thursday afternoon. Strong inflation data was released for the US and the trajectory for a potential further rate hike from the Federal Reserve is back on the table, at least that’s the market census for now.
GBP/USD opened at 1.2318 on Thursday and by the time the trading session closed we saw a rate of 1.2174, a drop of 1.1%. While EUR/USD opened at 1.0617, we saw a similar movement and a drop of 0.85% by closing time down to 1.0527. Federal Reserve hold their next monetary meeting on the 1st of November, with data releases of retail sales,
GDP growth rate and labour figures announced within that timeframe. This will both give indications of what path the Federal Reserve will be suggested to take. More importantly there is room for similar scenarios like yesterday – when we see large volatility to the markets.
High inflation has been the main challenge for nations and their Central banks for a long while, and interest hikes has been the way forward to tackle this issue. With uncertainty in the world, Russia – Ukraine still ongoing and the escalation between Israel and Palestine, we have seen oil prices surge and with potential sanctions in place from the Western world, we could see this continue.
This would lead to further pressure on holding inflation levels down. Initially hearing from certain central banks mentioning that they have reached their peak, we could see changes in the near future and we will keep a close eye on upcoming announcements – leading us onto this afternoon and a speech from Federal Reserve member Patrick Harker.
