Euro Forecast: EUR/USD to Weaken if ECB Increases Bond Buying
Fundamental Euro Forecast: Neutral
The recent sharp rise in sovereign bond yields, including those issued by Eurozone governments, has clearly unsettled members of the European Central Bank’s policymaking Governing Council.
That means action is possible at their meeting this coming Thursday. There will be no major easing of monetary policy, such as a cut in interest rates, but a decision to step-up bond purchases is possible and such a move would be negative for EUR/USD. Advertisement
Euro price to weaken if ECB steps up bond purchases
Member after member of the European Central Bank’s Governing Council was warning last week that the ECB would have to respond to the recent surge in sovereign bond yields around the world as traders reacted to fears of higher inflation when the global economy recovers from the slump caused by the Covid-19 pandemic.
British Pound (GBP) Latest: GBP/USD to Remain Stable, No Response to UK Budget
GBP price, news and analysis:
GBP/USD continues to trade just under the 1.40 level, as it has since early Friday, and shows no sign yet of breaking either higher or lower near-term.
There was nothing in Wednesday’s set-piece UK Budget, or the accompanying economic forecasts, to affect it one way or the other.
Traders need to keep an eye out for rising Gilt yields, however, as they could begin to increase concerns about inflation and a possible response from the Bank of England. Advertisement
GBP/USD stability to persist near-term
The UK Budget later this session will be a major political event but is not likely to affect Sterling, although the currency could move on the accompanying economic forecasts.
IG client sentiment data show retail traders are overwhelmingly long both silver and gold, and from a contrarian perspective that’s sending bearish signals for both precious metals.
British Pound (GBP) Latest: GBP/USD to Extend Near-Term Downtrend dailyfx.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from dailyfx.com Daily Mail and Mail on Sunday newspapers.