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  • richard evans

ECB rates could rise as high as 4% by the summer

Good morning

GBPUSD traded down to 1.1925 yesterday, similar level to the lows we saw late last week and earlier this week, and indeed back on 17th Feb. As such it looks as though this area could become increasingly important. It has since crept back up towards 1.2000, currently 1.1980. GBPEUR now 1.1285, EUR just unable to push any higher against GBP despite ECB minutes yesterday suggested the EU economy was holding up better than had been expected and there were no signs so far of over-tightening.

Perhaps we will have to wait until the next ECB rate meeting in a couple of weeks, I can’t imagine we will have anything other than a 50bps rise from them but it will be interesting to hear how hawkish they sound. Talk yesterday is that ECB could lift rates to 4% by the summer which surely should offer support for the single currency. Seeing some interest in upside EURUSD for the next 2-3 months.

I certainly shouldn’t say this but I do get the feeling that the currency markets have settled into a sensible range. There should be no major surprises from central banks, we do remain data-dependent but we have a decent idea of what the next decisions will be from ECB and Fed, BoE maybe slightly less certain. GBPUSD around 1.2000, EURUSD around 1.0650 seem comfortable levels for the time being. I know, famous last words and all that….

Next weeks calendar looks pretty full, US employment numbers will be out next Friday, before then we have rate announcements from RBA, BoC, BoJ. RBA up first on Tuesday, looking for a 25bps rise to take rates to 3.6%.

For now we’ll finish this week with several Fed officials speaking, don’t really expect anything other than the usual ‘we are not done yet, more rises to come, maybe a higher peak in rates if incoming data is good’ sort of thing.

Without wishing our time away, I’m looking forward to the weekend already. I have a charity quiz to attend this evening where my lack of general knowledge will be clearly on display. In fact, its not a lack of general knowledge, but rather its always just the wrong categories. Anyway as always I’ll try my best and hope to be in charge of the pen so I can at least look useful.

Spurs playing Wolves, can’t say I’m looking forward to that, no six nations rugby this weekend but its probably about time I got the lawnmower out. I think there’s probably more moss than grass at the moment so maybe a sprinkling of ‘weed and feed’ could be in order. Might be a bit early. Anyway that’s probably as exciting as it gets.

Have a great weekend as and when it comes…..

- 09.00 EU S&P composite PMI

- 09.30 UK S&P composite PMI

- 14.45 US S&P composite PMI

- 15.00 US services ISM

- 16.00 Feds Logan speaks

- 16.45 Feds Bostic speaks

- 20.00 Feds Bowman speaks

- 21.45 Feds Barkin speaks

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