GBP had a third consecutive day of recovery against the USD and briefly went through the 1.40 barrier, but swiftly retreated to 1.3950. Against the EUR we saw a new 11 week high of 1.1723.
All eyes will be on the Bank of England today as they issue fresh guidance on policy and outlook for interest rates and the economy. The tone struck will be the key driver on whether the GBP recovery can continue. The FED shocked markets by signaling two rate hikes in 2023 contrary to none at all beforehand, on the back of higher inflation and improving employment. Could the UK follow suit after the release of yesterdays’ s PMIs showed inflationary pressures on UK companies was at exceptional levels.
In Brexit related news, tensions between the EU and UK over the Northern Ireland protocol appear to be easing. Tensions had risen between the two over the matter of flow of food from the rest of the UK to Northern Ireland, which threatened a trade war, however officials on both sides of the table are optimistic a truce can be struck over the checks.
On top of the Bank of England meeting, a host of data from the US will be released including the durable goods orders, GDP and initial jobless claims and in the Eurozone, German IFO Business climate, which measure business confidence, is out this morning.
Have a good day.
Joseph Sidders, Relationship Manager.
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