Market moves were negligible over the course of the day. Initially we saw the USD gain at the start of the day, but as we approached European close, markets went risk-on with equities running, and GBPUSD and EURUSD getting close to the highs we saw yesterday following the fall in inflation figures.
The Fed as expected hiked by 0.50% followed by a hawkish statement from Chair Powell, indicating that rates will continue to be hiked to, and kept at, 5% – 5.25% all throughout 2023. USD gained initially, then sold off and since has been strengthening back coming into today.
Markets have gone risk-off as well, all finishing lower. Now that the Fed has spoken, and insist on higher rates, we could well be near peak GBPUSD and EURUSD highs.
A 0.50% rate hike by the Bank of England and European Central Bank is all but priced in by the markets, and as ever we look to see if any forward guidance is either hawkish or dovish.
Based on recent comments by members of each respective bank, it would seem that out of the two the ECB will be the more hawkish. Add that to the recent change in sentiment on the EUR, with the argument that EUR headwinds may have passed, it seems that on the GBPEUR, we could be near the top end of its range. But, this will be based on the BoE being dovish.
Add on to the Fed speak last night, which is insisting interest rates will be higher than what markets are pricing, and that there will be no rate cuts next year, suggests that markets could go risk-off and thus GBP pairs lower.
Thus, if you have the need for EUR going into 2023, then it is worth looking at your requirements and looking at how we can negate any adverse move on GBPEUR.
Equals Market Analysis– 15th December 2022
Today’s Market Rates
Today’s Interbank Rates at 09:24 am against sterling movement.
GBP>EUR – 1.1609
GBP>USD – 1.2316
EUR>USD – 1.0610
GBP>CAD – 1.6717
GBP>AUD – 1.8180
GBP>SEK – 12.668
GBP>AED – 4.5224
GBP>HKD – 9.5780
GBP>ZAR – 21.374
GBP>CHF – 1.1428
· CHF SNB Interest Rate Decision
· CHF SNB Monetary Policy Assessment
· CHF SNB Press Conference
· GBP Bank of England Minutes
· GBP BoE Asset Purchase Facility
· GBP BoE Interest Rate Decision
· GBP BoE MPC Vote Rate Cut
· GBP BoE MPC Vote Rate Hike
· GBP BoE MPC Vote Rate Unchanged
· GBP Monetary Policy Summary
· EUR ECB Monetary Policy Decision Statement
· EUR ECB Rate On Deposit Facility
· EUR ECB Rate On Main Refinancing Operations
· USD Retail Sales (MoM)(Nov)
· USD Retail Sales Control Group(Nov)
· EUR ECB Press Conference
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