Sterling remained largely unchanged against the euro over the course of the week however, due to the turn of events in the Ukraine war, has strengthened against the single currency this morning. This follows Putin’s announcement to escalate the war in Ukraine with a partial mobilisation, which has weakened the euro as markets now look towards ‘safe-haven’ currencies, such as the dollar (which has also strengthened against the euro).
In data news, Interest rates are the popular topic this week with central banks fighting diligently against soaring inflation . Markets will be watching closely for both the Bank of England and the Federal Reserve’s interest rate decisions; the BoE will announce its latest rate tomorrow afternoon following Fed’s announcement this evening.
Since the BoE’s last meeting, which saw UK interest being raised to 1.75%, the Bank is expected to increase the interest rate again, this time to an unprecedented 2.25% in today’s meeting. If the Bank does as expected, UK borrowing rates will be at their highest level in 13 years.
Meanwhile, in an aim to boost UK business growth, Liz Truss has signed off on plans to change economic policy. Those plans include removing the cap on banker’s bonuses, slashing national insurance and getting rid of a planned rise in corporation tax.
It’s a quiet day for eurozone data, following the Sveriges Riksbank’s interest rate hike yesterday. Markets faced a shock as Sweden’s interest rate was raised by an unexpected 100 basis points (much higher than the 75 basis point increase that was anticipated).
In the US, the Federal Reserve will announce its interest rate decision at 7pm. The Fed is expected to raise the US interest rate by 75 basis points in today’s meeting, and if it does, America’s borrowing costs will be the highest they have been in 14 years.
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