Gentium FX | Daily Report - 24th March 2023- Bank of England Increase Interest Rates by 0.25%

GBP: Yesterday, the Bank of England increased interest rates by 25 basis points. Although there was no accompanying press conference this time, the statement that was released at the same time suggests that the Monetary Policy Committee are open to all possibilities and did not provide forward guidance to the market. Some analysts believe the central bank will leave interest rates unchanged at the next policy meeting in May. UK retail sales came out better than expected at 1.2% compared to 0.2% that was forecast. Flash manufacturing and services PMI figures will be released at 9:30am which may cause some short term volatility.

EUR: Following on from the banking crisis, the ECB surprised the market by taking a hawkish stance last week – raising interest rates by 50 basis points. This along with a slight recovery in investor sentiment after the UBS takeover of Credit Suisse has contributed to the Euro strengthening particularly against the Dollar. ECB member Knot mentioned that he expects the central bank to hike interest rates again in May. This morning, the focus will be on Eurozone and German PMI figures which will be closely watched by the market.

USD: The Federal Reserve's lack of future guidance on interest rate hikes has meant that the market's pricing of interest rate expectations is currently being linked to the ongoing banking crisis which has led to a weaker Dollar. US Treasury Secretary Yell has suggested that the government would provide substantial financial support to alleviate ongoing concerns about regional US banks, which indicates to the market that the situation hasn’t been resolved yet. US manufacturing and services PMI data is also due later this afternoon at 1:45pm.?

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