EUR/USD Exposed To Fed Interest Rate Decision Risk, BoE Interest Rate Decision Due This Week (EUR/GBP, GBP/CAD)

Inflation Breakevens Rose After Chair Jerome Powell’s Speech

Summary:

  • EUR/USD exposed to risks related to the Fed interest rate decision on Wednesday.
  • The BoE interest rate decision on Thursday will be crucial.
  • GBP/CAD may now be on the verge of lurching toward all-time lows.

Euro is still stronger than some other currencies

The market is reflecting mixed market signals for this currency pair. The EUR/USD has been able to maintain its stability recently by simply remaining stable, which isn't really saying much for it. The Euro to Dollar exchange rate began the new week near parity and exposed to risks related to the Federal Reserve's (Fed) interest rate decision on Wednesday, however there is an admittedly remote chance that the latter could spark a firecracker surge by the single currency later this week.

The Euro is still stronger than some of the other currencies, but it is expected to keep falling against the Dollar and reach new cycle lows.

EUR/USD Exposed To Fed Interest Rate Decision Risk, BoE Interest Rate Decision Due This Week (EUR/GBP, GBP/CAD) - 1 EUR/USD Price Chart


BoE interest rate on Thursday

The market is reflecting bullish signals for this currency pair. The exchange rate between the pound and the euro has fallen for seven straight weeks, but it might go considerably further this week and possibly to record lows if the market panics about a probable Bank of England (BoE) decision to sharply raise Bank Rate on Thursday.

With the scale of the most recent Bank Rate increase and any hints or guidance regarding the outlook for the benchmark, the BoE interest rate decision on Thursday will be crucial, yet there is a risk that the bank will feel pressured to literally knock the Bank Rate ball out of the park.

EUR/USD Exposed To Fed Interest Rate Decision Risk, BoE Interest Rate Decision Due This Week (EUR/GBP, GBP/CAD) - 2 EUR/GBP Price Chart

GBP/CAD

How the market could be likely to react to any particularly substantial interest rate rise from the Bank of England (BoE) this Thursday, the Pound to Canadian Dollar exchange rate may now be on the verge of lurching toward all-time lows. Although there is a chance it might fall further if the BoE smashes the Bank Rate ball out of the park on Thursday, sterling crept higher versus the Canadian Dollar to start a holiday-shortened week and remained safely above the 12-year lows reached over a fortnight earlier. A recent increase in core inflation, the BoE's most recent Inflation Attitudes Survey, and the new UK Prime Minister's proposal to freeze or cap household energy costs through public subsidy are reasons to believe it might as well. These factors could influence policymakers to view this as a medium-term inflation risk.

EUR/USD Exposed To Fed Interest Rate Decision Risk, BoE Interest Rate Decision Due This Week (EUR/GBP, GBP/CAD) - 3 GBP/CAD Price Chart

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

Inflation Breakevens Rose After Chair Jerome Powell’s Speech

Rebecca Duthie

Remote Editor and writer Intern
FXMAG.COM

Rebecca has a bachelors degree in Investment Management, a Post Graduate Diploma in Financial Planning and is currently enrolled in a Masters program in International Management with a Specialization in International Finance.