Markets are likely to keep a close eye on the pound’s movements as it falls ahead of the UK interest rate announcement

Markets are likely to keep a close eye on the pound’s movements as it falls ahead of the UK interest rate announcement

14.06.2022

In yesterday's U.S. currency markets, the dollar surged on the back of a sharp rise in U.S. Treasury yields, with the euro/dollar pair falling approximately 120 pips from 1.0518 to 1.0399. The euro/dollar pair has continued the downward trend that began last weekend, and if this decline persists, we will need to closely monitor whether the pair will target last month's low of 1.0351.

Ahead of the Bank of England’s interest rate announcement the day after tomorrow, the pound has been trading lower, with the EUR/GBP pair rising from 0.8529 to 0.8594. While a rate hike to 1.25% is expected at the BOE’s announcement the day after tomorrow, we want to carefully assess the market’s reaction in the run-up to the event to see if tomorrow’s UK Consumer Price Index (CPI) results will cause any fluctuations.

Today’s schedule includes the UK unemployment rate, UK jobless claims, and Germany’s consumer price index (final reading) at 3:00 PM Asia time; the Eurozone ZEW Economic Sentiment Survey and Germany’s ZEW Economic Sentiment Survey at 6:00 PM Europe time; the US NFIB Small Business Optimism Index at 7:00 PM; and, once US trading hours begin, Canadian manufacturing shipments at 9:30 PM,the US Producer Price Index, and at 7:45 the following day, New Zealand’s Q1 Current Account Balance. We will be closely monitoring the movement of the pound, which is currently falling ahead of the UK interest rate announcement.