Fed hikes by 0.75% in biggest increase since 1994. BoE set to hike for fifth consecutive meeting.
June 16, 2022
GBP/USD 1.2089 GBP/EUR 1.1634 EUR/USD 1.0392 USD/CAD 1.2928 EUR/CHF 1.0214 EUR/SEK 10.6919 EUR/NOK 10.4494 EUR/DKK 7.4384 USD/ILS 3.4592 AUD/USD 0.6975 NZD/USD 0.6257 USD/SGD 1.3899 USD/JPY 133.68 USD/CNH 6.7256 USD/INR 78.0863 EUR/ILS 3.5943 GBP/ILS 4.1818 USD/ZAR 15.9317
The Bank of England is set to hike rates by 0.25% for the fifth consecutive meeting. Three members are expected to back a 0.5% hike. Concern is building around rates, some analysts have highlighted the risks of the BoE hiking too much, given the prevailing weak economic data from the UK.
The PM’s ethics advisor resigned yesterday, after suggesting that Johnson broke the ministerial code. This follows a week which has seen emphasis placed on the government’s two most divisive issues, the Rwandan deportation flights, and the Northern Ireland Protocol.
GBPUSD trades -0.77% lower, below 1.21. The FTSE100 has opened lower by -1.45%.EUR
The ECB held an emergency meeting yesterday, to discuss how quantitative tightening could impact borrowing costs in the bloc’s most indebted currencies. It introduced a new anti-fragmentation tool, which can be used to aid struggling members.
EURUSD trades down -0.52%, and the Euro Stoxx has opened -1.67% lower.USD
The Fed raised rates by 0.75% in the biggest increase since 1994 and signalled that it intends to tighten aggressively. The Fed has been spurred into action following last week’s CPI shock and the FOMC has projected a benchmark rate of around 3.4% by year-end.
Powell reaffirmed his believe that a soft landing is possible, however he did stress that it could be ‘difficult’. Officials have signalled that they expect inflation to be tamed by the end of next year.ASIA/PACIFIC
The BOJ has begun its two-day meeting where it is not expected to change rates, it could however tweak the range for 10-year yields.
New Zealand’ economy unexpectedly contracted in the first quarter, with GDP falling 0.2% from the previous three months.ILSUSDILS trades 0.7% higher, following a slip in the later hours of yesterday’s session.Data & Events
BoE rate decision
Switzerland rate decision
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.