All eyes are on the pound’s performance following the rate hike to 0.5%

All eyes are on the pound’s performance following the rate hike to 0.5%

04.02.2022

Yesterday, U.S. currencies moved in tandem with falling stock prices following earnings reports from tech companies, causing the Dollar Index to drop to 95.19. As the U.S. dollar weakened, the EUR/USD pair rose by about 200 pips from 1.126 to 1.146, surging to a level close to its recent high of 1.148.EUR/USD is currently positioned just above the 120-day moving average (MA) on the daily chart, and the focus will be on whether it can break above the 120-day MA line at 1.146 with a solid candlestick body.

Among European currencies, the pound surged after the Bank of England raised its policy rate from 0.25% to 0.5% for the second consecutive meeting yesterday, with the GBP/JPY pair climbing from 155.04 to 156.50. However, the euro, which is also facing inflationary pressures, rose even further. The EUR/GBP pair surged by about 140 pips from 0.828 to 0.842, hitting a new high for the month.

Today’s schedule includes German manufacturing orders at 16:00 CET, French industrial production at 16:45, remarks by Bank of England Governor Bailey at 17:00, the UK construction PMI at 18:30, and Eurozone retail sales at 19:00.21:15 UK BOE Deputy Governor Broadbent’s remarks and UK MPC member Pill’s remarks, followed by US-time releases at 22:30 with Canada’s unemployment rate and US nonfarm payrolls, and at 24:00 with Canada’s Ivey PMI. With these US-time releases, we’ll be closely watching to see if the rising European currencies can hold their ground against the US dollar.