• Category: News

Euro and British pound are under bears’ pressure

One of the important events of the last week was the publication of minutes of the last meeting of Bank of England on monetary policy topic. With sustained economic growth in the UK, as evidenced by the incoming economic data, some analysts expect the central bank will raise interest rates later this year.

Euro and British pound are under bears’ pressure

These expectations in recent months contributed to the growth of the British pound in tandem with the U.S. dollar, and the cross-rate with the euro. Thus, it was expected that the protocol will be reflected the emergence of votes in favor of raising interest rates, but this has not happened. All members of the Committee again voted unanimously to keep rates at current levels. Economists concerned about the lack of growth in wages, amid rising interest rates, which could destabilize the economic recovery.

In addition, analysts suggest that by the end of this year, consumer price inflation in the UK could fall to 1.0% and then raise of the interest rate cannot been considered. Since interest rate rise has already been accounted in the current rate of the British pound in tandem with the U.S. dollar, sterling hit fresh highs.

The single currency has continued to show a negative trend falling to 1.3420. Business activity in the manufacturing and services sector in Germany and the Eurozone were quite positive, but they were unable to support the recovery of EURUSD. This week reports on retail sales and the labor market in Germany, as well as the consumer price index in the Eurozone will be published, which could affect the dynamics of the single currency. Nevertheless, the European Union is able to tighten sanctions against the Russian Federation, which to some extent may negatively affect the economy of the Eurozone, so an attempt to increase of EURUSD will be limited.

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