Jackson Hole Economic Symposium Gave Guidance On Future Monetary Policy Decisions From Major Central Banks (EUR/USD, EUR/GBP, GBP/USD)

The EUR/USD Pair Has All Signs Still Point Upward

Summary:

  • Fed anticipates that tightening will cause growth to decelerate.
  • ECB indicate a hawkish outlook.

Both Fed and ECB holding a hawkish outlook

The market is reflecting bullish signals for this currency pair. He made it clear in his speech at the Jackson Hole conference that the Fed anticipates that tightening will cause growth to decelerate and that households would experience some pain as a result. His comments that the present rate is neutral appear to have cleared up any doubt. The Jackson Hole Economic Symposium confirmed what the majority of attendees had anticipated before the event even began: that inflation does not appear to be slowing down, necessitating sustained resolve on the part of the Fed in the form of unrelenting interest rate increases.

 

Not only the Fed, though; ECB members also contributed to the narrative by speaking about the approaching rate decision with a heightened feeling of urgency and proposing increases of 50 or 75 basis points. After the unexpected 50 bps rate increase in July, the interest rate meeting on September 8th could result in a second rate increase. Villeroy, Schnabel, Kazak, Knot, and Holzmann all agreed that the rate increase in September should have been significant (by ECB criteria). It is action time, according to Oli Rehn, one of the ECB's slightly more dovish members, and the next move will be "important."

EUR/USD Price Chart

 

Euro rallied against the GBP on Monday

The market is reflecting bullish signals for this currency pair. Entering the new week, the Euro was supported by the hawkish outlook from the ECB that was indicated at the Jackson Hole Symposium on Friday. Risk of a UK recession still remains high.

EUR/GBP Price Chart

 

Hawkish fed weighs on GBP/USD

The market is reflecting mixed signals for this currency pair. The exchange rate between the pound and the dollar initially increased on Friday, but it quickly lost those gains when Federal Reserve Chairman Jerome Powell warned that businesses and individuals would struggle more if the bank raised interest rates in a bid to lower U.S. inflation. 

 

Following last week's hawkish remarks by Fed Chair Powell at the Jackson Hole Economic Symposium, the pound sterling continued to decline this past Monday. Markets had anticipated this outcome in large part, but confirmation revealed the differences between the economies of the US and UK. Goldman Sachs reported the decrease in UK economic data this morning, reiterating the Bank of England (BoEopinion )'s from a few weeks ago that a UK recession is anticipated in the fourth quarter - a significant change from their earlier prediction.

GBP/USD Price Chart

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






The EUR/USD Pair Has All Signs Still Point Upward

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.