ECB Deliver Rate Hike Despite Financial Instability
The ECB followed through on its long-communicated guidance with a 50bps hike yesterday but accompanied this with very limited signalling regarding the future policy path, against a backdrop of financial stability concerns. Had this meeting taken place just one week ago, the bank may have sounded a more hawkish note, given yesterday’s revision are higher than its core inflation and GDP growth forecasts. The euro lost its morning gains against The pound, finishing the day circa 1.14.
Mixed Week for USD
Unemployment fell in the US, usually a good indicator of future economic growth. The Greenback lost ground most notably against GBP and EUR as the day drew to a close, with The dollar losing over a cent in the last 24 hours. Consecutive poor Manufacturing releases from the US have probably contributed to the downfall, adding fuel to the fire of what seems to be the start of a banking crisis, possibly globally. Sun Valley, Credit Suisse… Who will be next?
Rounding off the Week
Technical levels in today’s markets appear to show continued momentum for The pound, although some key resistance for GBPUSD, GBPAUD, GBPEUR and GBPJPY are close and may create a sell-off as we close out this week.
The main data release from today is from the US. A survey of about 500 consumers, which asks respondents to rate the relative level of current and future economic conditions. Financial confidence is a leading indicator of consumer spending, which accounts for most of the overall economic activity.