Economists at Commerzbank expect the GBP to weaken against the EUR in the coming quarters.EUR should benefit from the ECB’s monetary policy turnaround
“Since inflation will probably rise further and the labor market is very tight, further monetary tightening is necessary in the short term. We now also expect more rate hikes. However, the BoE is still likely to act too cautiously when it comes to fighting inflation. This, coupled with the risk of significant economic slowdown, will weigh on the pound.”
“We assume that the ECB will also initiate its monetary policy turnaround in July. This should support EUR/GBP.”“We now also expect GBP to weaken further against EUR next year. The BoE is likely to pause, while the ECB will tighten for a bit longer. At the same time, inflation in the UK is unlikely to fall as quickly, while at the same time the economy should weaken significantly.”
EUR/USD holds above parity after US inflation data
EUR/USD has turned south and tested parity after the data from the US showed that the annual CPI jumped to 9.1% in June from 8.6% in May. Following the knee-jerk reaction, the pair seems to have steadied above 1.0000 despite the risk-averse market atmosphere.
USD/CAD drops below 1.3000 on BOC’s 100 bps rate hike
USD/CAD fell sharply with the initial reaction to the Bank of Canada’s decision to hike its policy rate by 100 basis points to 2.5%. As focus shifts to BOC Governor Tiff Macklem’s press conference, the pair trades in negative territory below 1.3000.
Gold rebounds from 2022-lows, trades near $1,720
Gold came under heavy bearish pressure and fell to its lowest level in nearly a year below $1,710 before staging a rebound toward $1,720. The benchmark 10-year US Treasury bond yield is up more than 1% on hot US inflation report, limiting XAU/USD’s upside.
JUST IN: Bitcoin price tumbles as US CPI sees highest spike in four decades
Bitcoin price reacted negatively to the US CPI data, wiping overnight gains. The inflation rate hit 9.1% in June 2022, the highest point in four decades. Analysts expect Bitcoin price to nosedive to yearly lows if bulls fail to takeover.