Euro Remains Under Pressure As European Gas Crisis Persists (EUR/USD, EUR/GBP, EUR/CHF), RBNZ Increased Cash Rate (GBP/NZD)

Summary:

• US inflation at 9.1%.
• Retreating USD and buoyant commodity prices offered NZD support.
• UK GDP data beat market expectations.
• EUR remains under pressure due to gas crisis.

Read next: US Inflation Reaches Nearly 41 Year High, RBNZ & BoC Increase Their Cash Rates 

EUR/USD

The market is reflecting bearish signals for this currency pair. Early on Wednesday the EUR/USD currency pair hit parity, a level not seen in 20 years. US inflation data for June was released on Wednesday and came in at 9.1%, a level that had increased since the May reading of 8.6%. Inflation has risen further despite the Fed’s continuous effort to drive inflation rates down through aggressive interest rate increases.

The Euro will continue to remain under pressure amidst the European gas crisis which is far from over.

✕ EUR/USD Price Chart

UK GDP Data beat expectations

The market is reflecting mixed signals for this currency pair. With the UK GDP data coming in surprisingly strong in the mid-trading week has led Goldman Sachs to lower their expectations for a looming recession in the UK economy. All components of the UK economy played their part in contributing to the better than expected data: manufacturing production increased 2.3% in May against a consensus forecast for 0.2%. Industrial production grew 0.9% against expectations for flat output and construction output increased 4.8% against the 4.4% expected.

✕ EUR/GBP Price Chart

EUR/CHF Currency pair

The market is reflecting bearish signals for this currency pair. The Swiss National Bank (SNB) surprised the markets in June with a 50 bps hike in interest rates. The SNB hosts quarterly meetings to discuss monetary policy, the next meeting is due in September whereas the European Central Bank (ECB) will make its decision regarding monetary policy at the end of the month.

✕ EUR/CHF Price Chart

GBP/NZD pushing downwards

The Reserve Bank of New Zealand increased their cash rate by 50 bps on Wednesday in an attempt to reign in persistent inflation. Although the move from the reserve bank was fully priced-in to the financial markets, the retreating US Dollar and buoyant commodity prices allowed room for the NZD to a number of currencies downward, including the pound sterling.

✕ GBP/NZD Price Chart

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