Excel Currencies Blog

ECB & the Fed offer markets dovish tones whilst banking concerns emerge again..

The £-$ rate is trading at a 1-year high today and so those with exchanges in the pipeline or who have yet to hedge some. most or all they may require this year please get in touch. A 7% increase in the last 2-months is huge and shouldn't be ignored in our opinion.

Whilst not changing much at all the last month, the £-€ rate has increased 2% in the last 2-months and so also represents a favourable time to exchange. The near-term guidance on this pair specifically is anyone's guess, as mid-market was meant to be trading below 1.10 economists had all forecast for it last year.

Plenty has happened this week so let's get to it..

The Fed raised interest rates by 25bp this week (expected), but a rather conflicting policy statement has muddied the water on forward guidance and has made the $ weaker.

The ECB also raised interest rates by 25bp (a 50% chance at the time with 50bp), which has also weakened the Euro. It was the smallest incremental hike since July 2022 and this would be a big reason why the single currency has fallen.

Global markets are in the red today after a new wave of US bank collapses are on the horizon, threatening once again the US financial system. Western Alliance (the 13th largest bank in the US) has seen its stock price drop by 40% after the FT reported a potential sale (which they have since denied). Another bank, PacWest, has seen its stock price plummet 50% as it confirms it's exploring a sale.

This news is UK/£ positive with investors treating it as a safe-haven, due to the stable and well-funded banking sector. A role it very rarely plays, so do expect things turn to around at some point in the near future. However for now, £ sellers are in the driving seat.