Concerns Of A Global Recession Continue To Weigh On Markets - Take A Look At The EUR/USD, EUR/GBP, GBP/AUD And EUR/JPY Currency Pairs
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Summary:
- ECB expected to increase rates at a faster pace.
- CBA thinks the AUD is at risk of trading at its lowest levels against the GBP since the start of the pandemic.\\
EUR/USD currency pair
The market is reflecting bullish signals for this currency pair. At this point, the market expects to see a continuing hawkish Federal Reserve, pushing both interest rates and long-term rates up even further, thus, the USD is likely to remain strong for most of the remainder of 2022.
The European Central Bank (ECB) is expected to raise interest rates further and at a faster pace, the ECB has already communicated hikes in both July and September, as it tries to contain the Eurozone inflation narrative.
As concerns around a global recession tighten, the aggressive 75 basis point rate hike made by the Fed has caused investors to be more cautious across the board.
EUR/USD Price Chart
Eurozone and UK economy slowing.
The market is reflecting bearish signals for this currency pair. UK retail sales declined in May as consumers felt the pain of rising prices which in turn did not allow the pound sterling a boost heading into the weekend. In addition the retail data from the UK came after the data revealved by France and Germany also missed market expectations. The markets are expecting economic slowdown in both the UK and Eurozone economies.
EUR/GBP Price Chart
CBA outlook on AUD
According to the Commonwealth Bank of Australia (CBA), the Australian Dollar is at risk of trading at its lowest levels against the British pound since the start of the Covid-19 pandemic. The CBA sees the AUD as being amongst the most vulnerable currencies to the recent souring of the global economic outlook.
GBP/AUD Price Chart
EUR/JPY
The market is reflecting mixed signals for this currency pair. As the Japanese Yen
(JPY) continues to weaken in the wake of a dovish Bank of Japan (BoJ), the Euro is also experiencing troubles in the wake of disappointing economic data released from France and Germany, which indicates a slowing of the Eurozone economy.
EUR/JPY Price Chart
Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
