Dear Clients,
Below is this week’s markets forecast from our trade desk. With the Fed (Wed), BoE (Thurs), and ECB (Thurs) holding their most recent policy meetings, this week will be crucial for central bank policy developments. meetings. Participants in the market will be keeping an eye on the BoC after it became the first G10 central bank to suspend its rate hike cycle this week. to watch whether the Fed, ECB, and BoE provide any indications that they are approaching the conclusion of their hiking cycles.
Although the Fed’s current plans call for more raises that would raise the policy rate over 5.0%, it is doubtful that they will be dialed back anytime soon. Instead, we anticipate the Fed will slow down the pace of its tightening cycle by delivering a modest 25bps hike. In contrast, greater 50bps rises are anticipated from the BoE and ECB this coming week. The possibility that the BoE will give 25 basis points less than the ECB is more likely.
We anticipate the ECB will indicate that although a further 50bps increase in March is still planned, it is less certain than the 50bps increase scheduled for next week. In these circumstances, we believe that next week’s BoE policy meeting poses a downside risk for GBP but it may not be sufficient to offset ongoing support for a stronger GBP from improving global investor risk sentiment.
We wish you all a fantastic week in and out of the markets.
Kind Regards,