Last week, we saw the ECB finally raise interest rates by 50 bps for the first time in over a decade. The initial reaction was positive for the Euro, but it seems that many market participants feel that this was too little too late, and following Mario Draghi’s resignation in Italy- I feel the Euro could be in for more weakness as time goes on. This was reinforced after the Euro weakened following the ECB speech and continued into Friday’s session.
In the UK, the race for the new PM has now been narrowed down to 2 candidates, Rishi Sunak & Liz Truss, currently, Liz Truss is the bookie’s favorite, but as it is a vote, it’s easier to not try and predict it, but to prepare for potential outcomes- in my opinion, either way, we end up with a general election in the next year or so, which will just mean more political instability- which will essentially mean a weaker Pound.
The main event this week is the Fed interest rate decision on Wednesday, where we are expecting a 75-100bps hike- right now 75bps seems more likely, but if we get any data that shows weakness in the U,S economy, then a 100bps could be on the table again, this is worth noting if you are trading GBPUSD or EURUSD.