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ECB Expected To Raise Interest Rates By 75bps (EUR/USD), Rishi Sunak Becomes Next U.K Prime Minister (GBP/AUD, EUR/GBP)

ECB Expected To Raise Interest Rates By 75bps (EUR/USD), Rishi Sunak Becomes Next U.K Prime Minister (GBP/AUD, EUR/GBP)| FXMAG.COM
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Table of contents

  1. USD retreated on Tuesday
    1. GBP lost early gains in wake of new prime minster
    2. Tuesdays market was favorable for riskier assets

Summary:

  • The European Central Bank is predicted to boost rates by 75 basis points.
  • Rishi Sunak warns of a difficult economic outlook ahead.

USD retreated on Tuesday

The market is reflecting bullish signals for this currency pair. In order to control the high inflation that was shown to be 9.9% year-over-year last week, the European Central Bank is predicted to boost rates by 75 basis points. A channel that dates back to February is putting a major barrier in the way of the EUR/USD. Since its creation, it has proven to be a very trustworthy structure, and until it is no longer useful, it will be the major reference.

After the dollar reached its peak, equities appear to have bottomed out on the basis of CPI, and now bonds appear to have reached the end of their capitulation phase. This should temporarily deflate the dollar and place some of its energy into other assets. Since it is just being used as a recovery trade, there is a chance that it could collapse suddenly.

ecb expected to raise interest rates by 75bps eur usd rishi sunak becomes next u k prime minister gbp aud eur gbp grafika numer 1ecb expected to raise interest rates by 75bps eur usd rishi sunak becomes next u k prime minister gbp aud eur gbp grafika numer 1 EUR/USD Price Chart

GBP lost early gains in wake of new prime minster

The market is reflecting bearish signals for this currency pair. This week saw a solid start for the pound, but it was unable to continue its upward trend when former chancellor Rishi Sunak was named the next prime minister-designate after the Conservative Party leadership contest, which will have a major impact on the pound and the UK economy going forward. After former Prime Minister Boris Johnson withdrew from the race for the position of Prime Minister, leaving former Chancellor Rishi Sunak on course for a coronation that is expected to produce the UK's fifth Prime Minister in the past six years on Tuesday, sterling increased against most major currencies to start the new week. The Pound, however, quickly lost its early gains as newly-elected Prime Minister Rishi Sunak warned of impending economic hardship and difficult choices involving the public finances in a speech to parliament. The S&P Global PMI surveys that indicated a deepening recession in the UK's manufacturing and services sectors in October followed closely behind all of this.

ecb expected to raise interest rates by 75bps eur usd rishi sunak becomes next u k prime minister gbp aud eur gbp grafika numer 2ecb expected to raise interest rates by 75bps eur usd rishi sunak becomes next u k prime minister gbp aud eur gbp grafika numer 2 EUR/GBP Price Chart

Tuesdays market was favorable for riskier assets

A thicket of technical resistances that could keep Sterling contained below roughly the 1.8000 level in the coming days has slowed the recovery from the post-referendum lows plumbed in late September, despite the Pound to Australian Dollar exchange rate remaining close to six-month highs in recent trade. Tuesday's market was favorable for riskier assets, as sterling outperformed all other major currencies. However, the Pound to Australian Dollar rate was unable to move through a Fibonacci retracement level at 1.7962 on the charts and its 100-week moving average at 1.8047.

ecb expected to raise interest rates by 75bps eur usd rishi sunak becomes next u k prime minister gbp aud eur gbp grafika numer 3ecb expected to raise interest rates by 75bps eur usd rishi sunak becomes next u k prime minister gbp aud eur gbp grafika numer 3 GBP/AUD Price Chart

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


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