ECB set to hike rates to highest level in over a decade. US stocks advance over suggestions of Fed pivot following Bank of Canada decision
October 27, 2022
GBP/USD 1.1595 GBP/EUR 1.1522 EUR/USD 1.0064 USD/CAD 1.3584 EUR/CHF 0.9934 EUR/SEK 10.9397 EUR/NOK 10.3135 EUR/DKK 7.4380 USD/ILS 3.5087 AUD/USD 0.6471 NZD/USD 0.5834 USD/SGD 1.4064 USD/JPY 145.71 USD/CNH 7.2427 USD/INR 82.3275 EUR/ILS 3.5310 GBP/ILS 4.0683 USD/ZAR 17.9903
The latest headwind facing hurting British businesses arises from higher borrowing costs. About half of small and medium-sized business said the pricing of loans was “poor” in the three months through September. This is the lowest in seven years, as businesses warn the cost of credit has more than doubled in over 12 months.
According to estimates, UK mortgage lending may be headed for its biggest plunge in over a decade, following a year which has seen a surge in interest rates and a cost-of-living squeeze that has strained households
GBPUSD trades 3.43% higher on the week, following perception that fiscal responsibility has been restored by the change in leadership.EUR
The European Central Bank is set to look past intensifying recession fears by lifting its main interest rate to the highest level in more than a decade as it aims to tackle euro-zone inflation. Despite some unsatisfaction from EU leaders, expectations see the ECB hiking rates by 75-bps later today.
The driving motivation behind the Governing Council is that inflation, almost five times above the ECB’s target. The necessity of tackling inflation is taking precedence over the need to shield the economy from a recession this winter.USD
Stocks advanced yesterday, as central banks provide some optimistic signals that less aggressive monetary tightening could be on the horizon. The Bank of Canada raised interest rates by a smaller amount than expected on Wednesday, 50-bps, compared to the forecasted 75-bps. This only adds to suggestions that a similar downshift could be seen by the Federal Reserve in December. However, Markets still heavily expect 75-bps of tightening at the November meeting.
Contractions in the services and manufacturing sectors (PMIs) showed that the Fed’s efforts to cool the economy appear to be having an impact. This in unlikely to alter the Fed’s policy as there are not currently convincing signs that inflation is subsiding. US GDP for the third quarter is expected today and is expected to signal growth of 2.4% after a brief contraction of -0.6% last quarter.ASIA/PACIFIC
Xi Jinping has said China is willing to work with the US to find new ways to cooperate. He cited that enhanced communication between the countries could help bolster global peace and development.
South Korea’s GDP rose 0.3% in the three months through September, meanwhile Australia’s export price index fell 3.6% in the same period.ILS
Israel’s trade deficit narrowed to $3.1 billion in September from $3.23 billion in August. USDILS trade 0.15% intraday.Data & Events
Italy Oct. Confidence/Economic Sentiment
ECB Rate Decision
US 3Q GDP
Trading in financial instruments may involve a high degree of risk and may not be suitable for all investors. Trading in financial instruments can result in both loss and profit. Investors should carefully consider whether financial instruments suit their needs, financial resources and personal circumstances.
The information contained in this material is solely for informational purposes only and it is not and should not be construed as an offer or a solicitation of an offer to buy or sell any financial instruments and cannot be relied upon as a representation that any particular transaction necessarily could have been or can be effected at the stated prices. This material does not contrue advice.
For more analysis on FX markets or information regarding SVB's FX services:
0800 023 1440 from within the UK
+44 207 367 7880 from overseas
See all of SVB's latest FX information and commentary.
© 2023 SVB Financial Group. All rights reserved. SVB, SVB FINANCIAL GROUP, SILICON VALLEY BANK, MAKE NEXT HAPPEN NOW and the chevron device are trademarks of SVB Financial Group, used under license. Silicon Valley Bank is a member of the FDIC and the Federal Reserve System. Silicon Valley Bank is the California bank subsidiary of SVB Financial Group (Nasdaq: SIVB).
Silicon Valley Bank is registered in England and Wales at Alphabeta, 14-18 Finsbury Square, London EC2A 1BR, UK under No. FC029579. Silicon Valley Bank is authorised and regulated by the California Department of Business Oversight and the United States Federal Reserve Bank; authorised by the Prudential Regulation Authority with number 577295; and subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request. Silicon Valley Bank is a subsidiary of SVB Financial Group, a Delaware corporation and is an affiliate of SVB Financial Group UK Limited. SVB Financial Group UK Ltd is registered in England and Wales at Alphabeta, 14-18 Finsbury Square, London EC2A 1BR, UK under No. 5572575 and is authorised and regulated by the Financial Conduct Authority, with reference number 446159. SVB Financial Group and its subsidiary Silicon Valley Bank are members of the Federal Reserve System and Silicon Valley Bank is a member of the FDIC.
Your eligible deposits with Silicon Valley Bank UK are protected up to a total of £85,000 by the Financial Services Compensation Scheme, the UK's deposit guarantee scheme. Any deposits you hold above the limit are unlikely to be covered. Please click here for further information or visit http://www.fscs.org.uk. For more detailed information about coverage and limits, please review our FSCS Information Sheet at http://www.fscs.org.uk.
This material, including without limitation the statistical information herein, is provided for informational purposes only. The material is based in part upon information from third-party sources that we believe to be reliable, but which has not been independently verified by us and, as such, we do not represent that the information is accurate or complete. The information should not be viewed as tax, investment, legal or other advice nor is it to be relied on in making an investment or other decisions. You should obtain relevant and specific professional advice before making any investment decision. Nothing relating to the material should be construed as a solicitation or offer, or recommendation, to acquire or dispose of any investment or to engage in any other transaction.
Foreign exchange transactions can be highly risky, and losses may occur in short periods of time if there is an adverse movement of exchange rates. Exchange rates can be highly volatile and are impacted by numerous economic, political and social factors, as well as supply and demand and governmental intervention, control and adjustments. Investments in financial instruments carry significant risk, including the possible loss of the principal amount invested. Before entering any foreign exchange transaction, you should obtain advice from your own tax, financial, legal, accounting and other advisors, and only make investment decisions on the basis of your own objectives, experience and resources. Opinions expressed are our opinions as of the date of this content only. The material is based upon information which we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such.