EuroZone Inflation Exceeds Market Expectations (EUR/USD) (EUR/GBP), New Zealand Economy Will Benefit From China’s Lockdown Easing (GBP/NZD), GBP Bullish (GBP/USD)
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Summary:
- Euro Zone inflation rose to 8.1% in May.
- Both the BoE and the ECB are expected to tighten monetary policy.
- The easing of lockdowns will benefit not only China’s economy but economies that rely on China for trading.
- The GBP may continue its strengthening streak against the USD going into the third quarter of this year.
EUR/USD maintains bullish sentiment
Market sentiment is reflecting bullish signals for this currency pair. Euro Zone inflation rose to 8.1% in May, this rate is around 0.4% higher than expectations, which reaffirms the European Central Banks (ECBs) case for tightening monetary policy in quarter 3.
The risk of slower growth is a reality, which may favour the US Dollar going forward. Whether the current strength in the Euro against the USD is going to continue may depend on which economy slows faster, the ECBs interest rate hike and the war in the Ukraine.
EUR/USD Price Chart
EUR/GBP reflecting mixed market sentiment
The market sentiment for this currency pair is reflecting mixed signals. There have been concerns about the UK economic outlook which have grown in response to rising inflation, which can be mainly attributed to rising energy prices. The Bank of England (BoE) is still expected to continue raising interest rates. In addition, the European Central Bank (ECB) is expected to tighten monetary policy which is instilling confidence in the Euro.
EUR/GBP Price Chart
NZD to benefit from China's strengthening economy
The NZD benefitted of Monday in the wake of China’s easing of COVID-19 lockdowns, strengthening against the Pound Sterling. The easing of lockdowns will benefit not only China’s economy but economies that rely on China for trading, New Zealand's economy is one of those who will benefit.
GBP/NZD Price Chart
US Dollar taking hits on the forex markets
The market is reflecting bullish signals for this currency pair. Seasonal factors may be able to aid the GBP continue to strengthen against the US Dollar. The recent macroeconomic data that has been released has been underwhelming for the market and therefore the US Dollar has taken a hit, in addition the market expectations of the Fed to slow or stop tightening monetary policy is also affecting the US Dollar negatively. The GBP may continue its strengthening streak against the USD going into the third quarter of this year.
GBP/NZD Price Chart
Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com
