GBP/USD remains pressured towards 1.3500 amid a downbeat mood. EU takes multiple Brexit-linked sites offline, UK-France jostle over immigration. UK PM Johnson hints at easing travel restrictions. US dollar capitalizes on hawkish Fed minutes ahead of ISM Services.
EUR/USD stays on the back foot in the early European session and trades below 1.1300 as the greenback continues to gather strength on rising US T-bond yields. The data from Germany showed that Factory Orders increased at a stronger pace expected in November but failed to help the shared currency find demand.
Fed minutes were relatively hawkish which triggered increased expectations of an early rate hike in March. The dollar reversed losses after the Fed minutes, although gains were limited against low-yield units.
The Fed at the end of last year lifted rate projections to three rate hikes this year, three hikes in 2023 and another two in 2024. This more aggressive stance is now accompanied by even more aggressive guidance that the rate lift-off could arrive “sooner or at a faster pace than participants had earlier anticipated.” This would imply that the start of the tightening cycle could match the projected end of net asset purchases in March.
FX Street Technical Analysis- 06th January 2022
GBP>EUR – 1.1948
GBP>USD – 1.3526
EUR>USD – 1.1324
GBP>CAD – 1.7267
GBP>AUD – 1.8875
GBP>SEK – 12.323
GBP>AED – 4.9668
GBP>HKD – 10.549
GBP>ZAR – 21.330
GBP>CHF – 1.2413
· EUR Harmonized Index of Consumer Prices (YoY)(Dec)
· USD ISM Services PMI(Dec)
· Forex Today: Yields rise on hawkish FOMC outlook, dollar regathers strength
· EUR/USD Forecast: FOMC Minutes remind sellers of Fed-ECB policy divergence
· BOE: Year-ahead output price inflation seen at 4.5% in three months to December 2022
· GBP/USD retreats towards 1.3500 amid Brexit woes, firmer US dollar
This document has been prepared solely for information and is not intended as an Inducement concerning the purchase or sale of any financial instrument. By its nature market analysis represents the personal view of the author and no warranty can be, or is, offered as to the accuracy of any such analysis, or that predictions provided in any such analysis will prove to be correct. Should you rely on any analysis, information or report provided as part of the Service it does so entirely at its own risk, and Frank eXchange Limited/Manor House Foreign eXchange Limited accepts no responsibility or liability for any loss or damage you may suffer as a result. Information and opinions have been obtained from sources believed to be reliable, but no representation is made as to their accuracy. No copy of this document can be taken without prior written permission.