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The pound has weakened to multi-year lows against the euro and the dollar after falling yesterday, overnight and this morning. Poor economic data and tensions between the UK and EU over the Northern Ireland protocol contributed to this, as well as the perception that the Bank of England may have lost control of rising inflation.
To add to sterling’s woes, the euro strengthened this morning after the European Central Bank announced an emergency meeting, which is due to take place today. This is to discuss issues surrounding eurozone bond movements.
The dollar is strong ahead of the Federal Reserve’s meeting later today, when officials will announce their latest decision on interest rates. An interest rate hike of 75 basis points is expected.
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GBP: Pound weaker ahead of BoE meeting
The pound weakened to multi-year lows yesterday against both the euro and the dollar. This was due to a mixture of factors, including poor UK economic data, tensions between the EU and UK, as well as the perception that the Bank of England has lost control of rising inflation.
The Bank of England will meet tomorrow to announce its next decision on interest rates. An interest rate hike of 25 basis points is expected, which is minimal in comparison to the Federal Reserve’s expected announcement of a 75-basis points hike.
The economic data calendar is empty for the UK today, so all eyes will be on the Bank of England’s meeting tomorrow.
GBP/USD past year
EUR: Euro strengthens on emergency meeting
The euro has strengthened against the pound and other currencies, however, is still weaker against the dollar.
The single currency was given a boost after the European Central Bank announced that it would hold an emergency meeting to discuss current market conditions. The meeting will take place today and comes in the wake of borrowing costs rising sharply in recent days.
Balance of Trade and Industrial Production figures will be released for the eurozone later today.
USD: Fed meeting later today
After climbing against a basket of currencies on Tuesday, the dollar has settled at a strong level today ahead of the conclusion of the Federal Reserve’s meeting.
The Federal Reserve are expected to hike interest rates by 75 basis points to tackle high inflation. The markets will be listening for any comments from Fed Chair, Jerome Powell, at the press conference following the announcement.
A slew of economic data will be released before the announcement, including retail sales figures for May. The figure is expected to fall slightly month-on-month to 0.2%, compared with 0.9% in April.
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