With investors attentions focused on this evenings FOMC meeting, markets traded in a tight range yesterday as they did on Monday. The Dollar was able to gain momentum in the Asian session and is holding firm at present going into the European open. Thus far, markets have “been pricing for the Fed to end its bond-buying around March and then proceed with one or maybe two rate hikes in 2022. Anything more than two rate hikes pencilled in for next year would be considered a hawkish surprise” and could force some movement from the US Dollar. The two-day event will begin this evening at 19:00 and conclude on Wednesday.
GBPUSD has been able to maintain a steady position as markets brace themselves before a (possible) storm. Yesterday, Cable opened the session at 1.3216 and was able to gain some modest upside, finishing at 1.3224. The Pound has since strengthened due to 10-year high inflation data released this morning. Inflation Rate YoY printed a final figure of 5.1% despite being forecasted at 4.7%. The Core number came in at 4.0%, 0.3% above forecast. This will no doubt add further pressure to the Bank of England who are already struggling. The BoE are due to meet tomorrow at 12:00 to give their latest interest rate decision and officials are already “under pressure to act to curb spiralling prices but reluctant to jeopardise an economic recovery already stuttering even before the arrival of the Omicron variant - and the restrictions designed to tackle its spread”.
Sterling was able to capitalize against the Euro on Tuesday. The pair opened at 1.1714 and edged closer to 1.1750 at the close, finishing at 1.1737.
EURUSD in contrast made a loss yesterday. The pair opened at 1.1282 and closed at 1.1267.
