Yesterday saw the Bank of England raise interest rates from 0.25% to 0.5% in a bid to tackle soaring inflation in the UK. Inflation is expected to reach 7.25% in April and average round 6% throughout 2022. After the initial announcement, GBP/EUR and GBP/USD bounced just under 0.5% to 1.2075 and 1.3626 respectively.
Shortly after the peak, GBP/EUR started to plummet, dropping 1.5% to 1.1880 after the European Central Bank changed its tone with a possible rate hike in Europe on the cards. The President of the ECB, Christine Lagarde, said the council had expressed “unanimous concern about inflation” after reaching 5.1% in January. This gave the euro some fresh impetus to stage a comeback against the USD with which it was battling multiple year lows only a few days ago, now trading at 1.1450 at time of writing.
Today, we will see employment data announcements from the US. As it is the first Friday of the month, the Non-farm payroll is announced at 13:30 giving us a further insight into the American jobs market, which will be watched closely by America’s central bank.
Have a great weekend.
Thomas Read, Senior Relationship Manager.
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