Rate Expectations
GBP
The British Pound began the week on a firmer footing as expectations grew that the Bank of England could raise interest rates again. Comments from Governor Andrew Bailey, along with ongoing concerns about inflation and higher energy costs, supported sterling. Looking ahead, the pound may lack direction without major UK economic data, while improving economic confidence elsewhere could affect sentiment.
EUR
The Euro weakened at the start of the week as higher energy costs and stronger demand for safer investments put pressure on sentiment. Rising gas prices also weighed on confidence. However, improving economic confidence across the region could provide some support in the near term. Investors will be watching the latest economic sentiment figures for signs of whether the eurozone’s outlook is continuing to improve.
USD
The US Dollar gained modest support as tensions in the Middle East encouraged some caution among investors. However, improving US-China trade relations helped limit concerns about the wider market outlook. Looking ahead, weaker US job vacancy data could weigh on the dollar, while stronger consumer confidence may provide support. Ongoing Middle East tensions could also affect investor confidence and demand for the currency.
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