Attention on the downside potential for the pound ahead of the BOE policy rate announcement
20.09.2022
- Canada: Housing Price Index
- Switzerland: Trade Balance
Yesterday, the U.S. dollar traded in a tight range against the euro, with the EUR/USD pair fluctuating back and forth. The pair moved between 0.9965 and 1.0029; on the daily chart, it is trading just below the 20-day moving average, and on the weekly chart, it remains below the 10-day moving average.With the FOMC meeting tomorrow, the direction of the market may become clearer depending on the extent of the policy rate hike, so we plan to remain in a wait-and-see mode for the time being.
Among European currencies, the euro has been holding steady at elevated levels against the pound. The EUR/GBP pair has been consolidating within a range of 0.8747 to 0.8787 while forming higher lows, and has now reached a new high for the year. Since no particular divergence is visible on the daily RSI, we will be watching for developments following the UK’s interest rate decision scheduled for the 22nd of this week.
Today, at 3:00 PM Asia time, we have the German Producer Price Index and the Swiss Trade Balance; at 9:30 PM U.S. time, the Canadian Consumer Price Index, the Canadian House Price Index, U.S. Housing Starts, and U.S. Building Permits; at 2:00 AM, remarks by ECB President Lagarde and the U.S. 20-year Treasury auction;and at 28:30, remarks by BOC Deputy Governor Beaudry. With the Bank of England set to announce its policy rate on the 22nd, we will be watching closely to see if the pound continues to weaken against European currencies.
Author: Keisuke Sakurai
