Thursday, June 30, 2022

Where is EURGBP Today

The EURGBP chart is currently displaying quite stable conditions which is surprising considering we’re waiting for the much-anticipated release of the ECB interest rate decision. Perhaps once these results are released, we’ll finally see some longer movements in the charts.

EURGBP Daily Time Frame Analysis Market is moving in the Descending Channel and the market has reached the lower low area of the Minor line of Descending Channel.

EURGBP Daily Time Frame Analysis Market is moving in the Descending Channel and the market has reached the lower low area of the Minor line of Descending Channel.

The UK’s CPI data is definitely a contributing factor to the slight bullish market conditions we are witnessing. However looking at a larger timeframe, we can witness that the overall condition of the market has not changed much except it is now slightly more bearish than usual. The EURGBP currency pair is currently teasing around the 0.830 region and it is expected that it would continue to drop once the ECB releases its decision.

ECB Interest Rate Decision

The ECB is set to release its interest rate decision for the month of May any time now. Stakeholders have been anticipating this decision since the meeting minutes release just a couple of days ago. It is almost expected that the rates will have to be increased from the current 0% as inflation has gotten quite out of control in the past couple of months. We are currently looking at an inflation rate of 7.5% which is inexcusable, to say the least. People have been facing a hard time keeping up with these rates with no salary increments. It has become increasingly difficult to pay for even the most basic of necessities. We are hopeful that the new interest rates will bring some relaxation to the price hikes we’re currently facing.

ECB plans for a special strategy meeting in Frankfurt Next week

 

Michael Hewson, Chief Market Analyst at CMC Markets, revealed his thoughts on the upcoming interest rate decision. He reveals, “The ECB is now faced with an enormous challenge with an inflation target of 2% that they are missing by a mile, an inflation forecast that now looks out of date at 5.1%, and rising bond yields which are likely to hurt the most indebted economies of Italy and Spain the most. Dirk Schumacher, Analyst at Natixis, also said a few words on this decision. He states, “Determining the appropriate pace for policy normalization in the current macro-economic environment has not become easier for the ECB. The crucial question for the April meeting is whether the end of net purchases will be brought forward.” Hugh Gimber, Global Market Strategist at J.P. Morgan, had came out in a statement on his thoughts on the ECB decision. He states, “The risk of a hawkish surprise from the ECB is quite clear. I expect them to take a tough tone today. I don’t expect them to take any action, but I do think they’ll send a very clear signal to the market that they stand ready to act.”

Sunak On UK CPI Data

The UK’s Consumer Price Index (CPI) data was released early on Tuesday which revealed that the inflation rate is now at a whopping 7.1%. This is the highest value it has ever seen since the early 90s. It was also revealed that consumers are paying significantly more for their groceries and other utilities like rent and bills than they had ever previously been paying for. The blame for this higher than anticipated CPI report was put on quite a few factors. The first is the ongoing war crisis in Ukraine which has disturbed the economic conditions of the whole of Europe. The second is the surge in oil prices. This surge comes as a surprise as both the US and IEA contributed to the global oil supply from their reserves. Despite this contribution, the oil prices only stabilized for a week before returning back to its soaring habits.

UK Budget will be present today by Chancellor Rishi Sunak

Rishi Sunak, Chancellor of the Exchequer, had revealed his thoughts on the CPI data and what he plans on doing in order to bring it under control. Sunak reveals, “We’re seeing rising costs caused by global pressures in our supply chains and energy markets which could be exacerbated further by Russian aggression in Ukraine. I know this is a worrying time for many families which is why we are taking action to ease the burdens by providing support worth around £22billion in this financial year, including for the most vulnerable through our Household Support fund. We’re also helping as many people as possible into work – the best way for families to gain economic security in the longer term.” Grant Fitzner, Chief Economist at ONS, revealed the key takeaways from the CPI report. He states, “Amongst the largest increases were petrol costs, with prices mostly collected before the recent cut in fuel duty, and furniture. Restaurants and hotel prices also rose steeply in March. The price of goods leaving UK factories has continued to rise substantially with metal and transport products both at record highs and food reaching its highest rate for over a decade.”

UK Unemployment Data

The UK released its unemployment data early on Thursday which revealed that the unemployment rate had fallen to 3.8%. This is the lowest it has ever been since the early 1970s. The surprising thing about this entire situation is that despite having a pretty low unemployment rate which shows that a significant amount of the population is currently working, there is still a huge number of jobs in the market that have to be filled. There is currently 11.3 million vacant jobs in the UK and not enough people to fill these positions. Employers are now even willing to pay significantly more in salaries in order to find someone to fill the positions. This is proving to be quite beneficial to people looking to enter the UK on a work permit since the UK is currently in desperate need of workers.

Upcoming Important Events

We are currently awaiting the interest rate decision by the ECB which is due to be released any time now. After the release of this decision, the ECB will hold a conference later today to discuss their reasoning behind this decision as well as answer any queries or confusions anyone may have regarding it. We are also awaiting the release of the Initial Jobless Claims report by the States. Their Core Retail Sales is also due to be released early on Thursday.

Also read