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Currency Market Update - June 23rd 2022

currency updateUK Inflation is continuing to rise at unprecedented levels, reaching 9.1% in May. Fuel and energy prices have been the biggest drivers of inflation, which has brought inflation to it’s highest point since 1982.

This has led to more calls for The Bank of England to not only continue rate hikes, but to also implement more aggressive rate hikes that fall in line with The Federal Reserve in The U.S, mainly due to expectations that inflation in The UK will reach at least 11% by the end of 2022.

Next Thursday brings the key release of GDP Growth figures for The UK, which will again no doubt influence the next move for The Bank of England. A reflection in falling growth expectations has seen GBP/EUR drop over 2% in value since the beginning of 2022 GBP/USD lose just shy of 10% of its value.

Continuing with rate hikes, it now looks set in stone that The European Central Bank will implement a rate hike of 25 bps in July, as well as a minimum 50 bps hike in September as Europe continue to struggle with soaring inflation due to supply chain issues and the knock-on effect of the deepening situation in Ukraine.

This afternoon brings another weekly release of Job’s data for The U.S, suggesting the labour market in The States is progressing to a more positive figure with an increased demand for retail workers when compared to the beginning of 2022. Any form of strength in the jobs market will only continue to verify The Fed’s view to continue hiking aggressively in the coming months.



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