20 Jun 2014
Monetary policy: Sterling benefits, euro suffers - Commerzbank
FXStreet (Córdoba) - Lutz Karpowitz, analyst at Commerzbank noted that differing medium-term outlooks for central bank policies are increasingly becoming a decisive driver for the FX market.
Key Quotes
Sterling is benefitting from speculation of an earlier-than-expected BoE rate hike, whilst the euro is expected to lose further ground.
“The FOMC meeting on Wednesday did not provide any news. The Fed remains on the tapering course previously set. It is nonetheless becoming obvious that the expected rate decisions of the individual central banks are increasingly affecting exchange rates. The latent pressure on EUR/USD is not the only illustration of that”.
“Sterling, above all, has been able to benefit from speculation about an earlier-than-expected Bank of England rate hike. For the first time since September 2012 EUR/GBP slipped below 0.80. Monetary policy depends above all on future economic developments as central bank
governor Mark Carney made clear by referring to the absence of an economic slowdown in the second half of 2014, and as a result British economic data has become particularly relevant for the FX market”.
“A flourishing economy and rate hikes on the other side of the Atlantic, and a further rise in euro zone national debt levels, are not a good breeding ground for higher EUR/USD in the long term...However, the closer the end of the bond purchasing programme comes, the more USD is likely to benefit”.
Key Quotes
Sterling is benefitting from speculation of an earlier-than-expected BoE rate hike, whilst the euro is expected to lose further ground.
“The FOMC meeting on Wednesday did not provide any news. The Fed remains on the tapering course previously set. It is nonetheless becoming obvious that the expected rate decisions of the individual central banks are increasingly affecting exchange rates. The latent pressure on EUR/USD is not the only illustration of that”.
“Sterling, above all, has been able to benefit from speculation about an earlier-than-expected Bank of England rate hike. For the first time since September 2012 EUR/GBP slipped below 0.80. Monetary policy depends above all on future economic developments as central bank
governor Mark Carney made clear by referring to the absence of an economic slowdown in the second half of 2014, and as a result British economic data has become particularly relevant for the FX market”.
“A flourishing economy and rate hikes on the other side of the Atlantic, and a further rise in euro zone national debt levels, are not a good breeding ground for higher EUR/USD in the long term...However, the closer the end of the bond purchasing programme comes, the more USD is likely to benefit”.