Fed Interest Rate Announcement Due Wednesday (EUR/USD), 50bp Hike From BOE Expected (EUR/GBP, GBP/NZD)

Fed Interest Rate Announcement Due Wednesday (EUR/USD), 50bp Hike From BOE Expected (EUR/GBP, GBP/NZD)

Summary:

  • Federal reserve interest rate announcement Wednesday.
  • Barclays updated their expectations for the next BOE interest rate hike.
  • NZD was a poor performer on Tuesday.

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Euro at risk of weakening

The market is reflecting bearish signals for this currency pair. The euro is at risk of falling as prospects of a weaker economic outlook and restricted gas flows through the Noord Stream 1 pipeline. The threat of Russian oil exports through the Noord Stream pipeline being reduced to 20% could contribute even further to the energy crisis in Europe and drive gas prices even higher. The market is awaiting the Federal Reserve's interest rate hike announcement which is due tomorrow.

Fed Interest Rate Announcement Due Wednesday (EUR/USD), 50bp Hike From BOE Expected (EUR/GBP, GBP/NZD)  - 1 EUR/USD Price Chart

EUR/GBP bearish

The market is reflecting bearish signals for this currency pair. Barclays bank has increased expectations to 50bps hikes from the Bank of England (BOE). A 50bp increase is now anticipated for August 4th, according to the UK economic team at Barclays after evaluating incoming UK data and signals from the Bank of England.

Fed Interest Rate Announcement Due Wednesday (EUR/USD), 50bp Hike From BOE Expected (EUR/GBP, GBP/NZD)  - 2 EUR/GBP Price Chart

GBP/NZD currency pair

The Pound to New Zealand Dollar exchange rate may be at risk of another decline below the 1.92 level due to a full calendar of event risks in the next few days, making it difficult for it to rise. On Tuesday, the U.S. Dollar recovered from 10-day lows vs the majority of its G20 counterparts, causing the GBP/NZD to increase for a third day in a row. The New Zealand Dollar performed worse than the other major currencies and Sterling.

Fed Interest Rate Announcement Due Wednesday (EUR/USD), 50bp Hike From BOE Expected (EUR/GBP, GBP/NZD)  - 3 GBP/NZD Price Chart

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

Rebecca Duthie

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.