Excel Currencies Blog

On Wednesday, the Fed decided to leave interest rates unchanged and break the consecutive hiking path of 10. There was a 70% chance of this result, but comments made after the decision were unexpected. A projection that another two interest rate hikes will be appropriate means this is a hawkish pause from the Fed.

Still, this didn't stop GBP capitalizing on the release which has gone on to a claim a huge 2% on USD this week. Yes, there should be more to come from this pair near and long term. But, a jump like this shouldn't be disregarded, nor should current levels trading at a 14-month high. This is prime hedging time for this pair!

The ECB as expected continued its hiking path with a raise of 25bp and gave no indication it was considering an end to hiking. ECB President Lagarde confirmed her team is 'not satisfied with the inflation outlook' due to wage pressures and acknowledged economic growth outlook has deteriorated since the last meeting (mainly due to Germany). 

Both central banks have practically confirmed that interest rates are going higher than predicted, but as the BoE has seemingly more to do with a much worse inflation figure, GBP remains in the driving seat.