GBPUSD tumbles following BoE decision. US Equities tumble on inflation and growth fears.
May 6, 2022
GBP/USD 1.2298 GBP/EUR 1.1717 EUR/USD 1.0497 USD/CAD 1.2867 EUR/CHF 1.0336 EUR/SEK 10.5015 EUR/NOK 10.0293 EUR/DKK 7.4401 USD/ILS 3.4119 AUD/USD 0.7071 NZD/USD 0.6402 USD/SGD 1.3876 USD/JPY 130.41 USD/CNH 6.7163 USD/INR 76.9025 EUR/ILS 3.5816 GBP/ILS 4.1961 USD/ZAR 16.1147
GBPUSD plunged yesterday, following the BoE decision. Despite raising rates, the meeting was collectively viewed as a bearish meeting, with the BoE openly signalling the high likelihood of a recession. Economic forecasts were slashed amid peaking inflation and slowing growth. GBPUSD fell from 1.257 to 1.236. The downward trend has continued this morning, trading down -0.66% to a low of 1.2280.
Early results in UK Local elections have shown resentment from Voters towards Boris Johnson’s Conservatives. They’ve lost several landmark London boroughs in what could add further pressure to Johnson’s tenor in Downing St.
The UK set out plans to regulate the tech industry but stopped short of providing the new regulator with any teeth to enforce these laws. The new watchdog, the Digital Markets Unit will be tasked with enforcing competition rules.EUR
According to ECB Holzmann, the ECB are set to discuss a rate increase at its June meeting and is likely to decide on one hike. This comes as reports from the Spanish Economy Minister confirmed they believe the peak of inflation has passed.
Viktor Orban has said the EU is at risk of fracturing its unified front against Russia, if it continues to push its proposals to ban Russian oil. The proposal has seen disunity as several countries rely much more on Russian energy than other members of the bloc.USD
US equities tumbled yesterday, with the NASDAQ dropping -5%. Markets fear the impacts of an aggressive tightening cycle from the Fed, which could push the US economy towards a recession. Markets are beginning to doubt Fed claims that a ‘soft landing’ is still possible. BoE Bailey’s comments also spurred fears that the recession outlook in the UK could be mirrored across the Atlantic.
Former Fed Vice Chair, Richard Clarida has stated that the Fed will need to raise rates to at least 3.5% to tame surging inflation, claiming that hiking to the neutral rate, will not be enough.ASIA/PACIFIC
Asian stocks slid following global growth concerns. The RBA may raise rates further as unemployment is forecasted to drop to the lowest level since 1974, and both headline and core inflation remain above target.ILS
USDILS gained 2% yesterday to trade above 3.4100 for the first time since November 2020. The pair has followed a strong uptrend over the last month, gaining 5.74% since the 11th April.Data & Events
BoE speakers – Pill, Tenreyro
ECB speakers – Rehn, Villeroy
Spain Industrial Production
US Non-Farm Payrolls.
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