Summary:

• Inflation reaches its highest level since the formation of the euro single currency.
• The pound sterling lost value to the Euro, US Dollar and other major currencies.
• RBA hikes interest rates.

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ECB putting themselves under pressure

The market is reflecting bearish signals for this currency pair. The European Central Bank (ECB) has repeated the message of ending their asset purchasing early in July, and will follow that with a 25 basis point hike in interest rates in the ECB meeting in July. By reiterating that they will stick to their timeline, the ECB has allowed themselves little flexibility to turn hawkish through tightening of monetary policy before July, despite inflation reaching its highest level since the euro was formed.

The market awaits the ECB’s release of macroeconomic projections which will occur on Thursday.

EUR/USD Price Chart

Pound Sterling falls on Thursday

The market is reflecting bullish sentiment for this currency pair. On Monday U.K Prime Minister Boris Johnsson won the vote of no confidence, inlight of this, the pound sterling lost value to the Euro, US Dollar and other major currencies. The pound sterling rallied on Monday in the wake of the news of Borris Johnssons vote of no confidence, some analysts drew the conclusion that the gain in the pound was linked to the prospects of a new leader whilst others said the outcome would not affect the market.

EUR/GBP Price Chart

AUD gains in the wake of RBA hikes

The market is reflecting bearish signals for this currency pair. The Reserve Bank of Australia (RBA) showed the market that they are committed to the fight against inflation and turned hawkish by hiking interest rates by 0.5%. However, the gains felt in the wake of this decision for the AUD were short lived.

AUD/USD Price Chart

EUR/CHF

The market is reflecting mixed signals for this currency pair. As risks for the Euro rise amidst rising inflation and the interest rate hikes from European Central Bank likely to only begin in July, the Euro has faced some mixed sentiment on Tuesday, making the safe-haven Swiss Franc more desirable.

EUR/CHF Price Chart

Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com