GBP dropped to 1.3044 against the USD yesterday, the lowest it has been for 3 weeks, following the release of March’s Federal Reserve meeting minutes. Meanwhile against the EUR it remains pretty steady, opening at 1.1990 and closing at 1.1994 yesterday.
The Fed raised its interest rates for the first time since December 2018 last month, moving from 0.25% to 0.5%, but the meeting record showed that “many” policy makers wanted to raise it by 0.5% to 0.75% and were deterred from doing so by the situation in Ukraine.
The minutes also confirmed that the Fed is looking to hike the interest rates by 0.5% once or more this year, particularly if inflation pressures remain elevated. Markets have already priced in a 0.5% increase to 1% next month. Yesterday’s minutes suggested the Fed may already be prepared to lift rates by the same amount all over again in June.
Later this morning the minutes from the ECB Monetary Policy meeting will be released and will give insights into the stance of the ECB policymakers from the March meeting. The monthly and yearly European retail Sales will also be released this morning and both will be the key drivers for the Euro today.
Have a great day.
Joseph Sidders, Relationship Manager.
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