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Last chance of currency volatility at FOMC conference

GBP / USDFundamental highlight:

  • GBP/U.S. dollar Keeps narrow range as FX volatility decreases
  • Delayed resumption is unlikely to have a significant economic impact
  • UK data plays second fiddle FOMC Meeting

GBP / USD keeps narrow range as FX volatility declines

As FX volatility continues to decline So is the excitement. The pound almost stuck in the range of 1.4080 to 1.4200 for most of the week, after which the currency ended more or less in the week we started. Looking ahead to next week, a press conference was announced on plans for the final stages of the UK Prime Minister Johnson’s economic resumption, and the UK is expected to delay the reopening for another two to four weeks, given recent reports in the UK press. .. Cases of UK Covid are increasing again in the epidemic of the Delta variant, but the good news is that hospitalizations remain low and are promising signs that the vaccine is working.

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Vaccine effective as a delta variant spread

Delayed resumption is unlikely to have a significant economic impact

April GDP figures exceeded the consensus by 2.4% (expected 2.3%) due to the rise due to outperformance in the services sector. The impact is not expected to be significant (from a market perspective) as the UK appears to delay the full resumption of the economy, and sentiment towards the pound may ease slightly, but this is temporary. Expected.

UK data plays second fiddle at FOMC conference

Next week, UK employment and inflation figures will be released. However, a common theme for the past few weeks has been that the index slides to post-pandemic lows, so the data is unlikely to be significantly upset in terms of volatility, confirmed by a £ 1W volume. That said, the main focus is on the FOMC’s monetary policy decisions. The dot plot that drew attention in March (whether it was a 50/50 call for a shift towards the 2023 hike) is expected to shift towards the 2023 hike and talks about when to start talking about taper. Is not expected, but subtle changes in the statement could draw attention, especially in the light of the (expected) surge in inflation. Therefore, it is important to note the changes in rhetoric surrounding the “substantial further progress” guidance that the Fed must reach before considering tapering negotiations. The removal of the word substantive, even if subtle, can be one of the first signs of the long road to asset tapering.

In addition, the Federal ReserveContinue to increase Treasury securities holdings by at least $ 80 billion per personMonthly and agency mortgages—–Over $ 40 billion in collateral per month do yountil Substantial further progress Made for the maximum of the committeeEmployment and price stability goals

Source: Federal Reserve

Federal Reserve Bank: Forex Traders Guide

GBP / USD Chart: Daily Timeframe

GBP / USD Weekly Forecast: Last Chance of Currency Volatility at FOMC Conference

Source: Refinitiv



Last chance of currency volatility at FOMC conference

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