The Bank of England (BoE) and the Swiss National Bank (SNB) will feature in the next series of central bank meetings on Thursday. Investors are speculating that some policymakers might debate a bolder half-point rate hike, with the talks likely being more intense within the SNB. Meanwhile in the eurozone, Friday’s preliminary business PMI figures could be important to watch amid a cracking economic backdrop.
Bank of England policy announcement –> GBP/USD
The British pound surged to its highest level in more than a year against the US dollar, as investors remained focused on the growth narrative in the US, questioning the Fed’s future rate hike plans. In the UK, the BoE is widely expected to deliver a 25 bps rate hike, but the pound may not pay attention, unless policymakers announce a surprise 50bps increase as some investors believe, and/or promise more tightening during the remainder of the year and beyond. Technically, GBPUSD looks overbought, however the bulls could try to reach 1.3000 before the next bearish phase commences.
Swiss National Bank policy announcement –> USD/CHF
Inflation in Switzerland is way more balanced than in other major economies, easing to 2.2% in May. Despite that, the SNB governor signaled recently that the job is not done, and more tightening might be needed, raising the odds for a 50bps rate hike to a toss against a 25bps rate increase. The SNB is probably trying to catch up with other major central banks as it’s still holding the smallest interest rate of 1.5% after the BoJ‘s -0.1%. In the event of an aggressive 50bps hike and signs that a rate peak is not near yet, USDCHF could extend last week’s downfall on Thursday at 07:30 GMT.
Eurozone S&P Global flash business PMI data –> EUR/USD
The ECB increased its deposit facility rate to 4.0% last week and flagged a couple of additional rate hikes ahead despite the eurozone officially entering a mild technical recession. Traders will look whether the contraction has deepened on Friday at 08:00 GMT when the flash S&P Global business PMI figures come out, even though growth concerns have barely affected the euro so far. A negative surprise in the data could press EURUSD instantly back below 1.0900.
The Bank of England (BoE) and the Swiss National Bank (SNB) will feature in the next series of central bank meetings on Thursday. Investors are speculating that some policymakers might debate a bolder half-point rate hike, with the talks likely being more intense within the SNB. Meanwhile in the eurozone, Friday’s preliminary business PMI figures could be important to watch amid a cracking economic backdrop.
Bank of England policy announcement –> GBP/USD
The British pound surged to its highest level in more than a year against the US dollar, as investors remained focused on the growth narrative in the US, questioning the Fed’s future rate hike plans. In the UK, the BoE is widely expected to deliver a 25 bps rate hike, but the pound may not pay attention, unless policymakers announce a surprise 50bps increase as some investors believe, and/or promise more tightening during the remainder of the year and beyond. Technically, GBPUSD looks overbought, however the bulls could try to reach 1.3000 before the next bearish phase commences.
Swiss National Bank policy announcement –> USD/CHF
Inflation in Switzerland is way more balanced than in other major economies, easing to 2.2% in May. Despite that, the SNB governor signaled recently that the job is not done, and more tightening might be needed, raising the odds for a 50bps rate hike to a toss against a 25bps rate increase. The SNB is probably trying to catch up with other major central banks as it’s still holding the smallest interest rate of 1.5% after the BoJ‘s -0.1%. In the event of an aggressive 50bps hike and signs that a rate peak is not near yet, USDCHF could extend last week’s downfall on Thursday at 07:30 GMT.
Eurozone S&P Global flash business PMI data –> EUR/USD
The ECB increased its deposit facility rate to 4.0% last week and flagged a couple of additional rate hikes ahead despite the eurozone officially entering a mild technical recession. Traders will look whether the contraction has deepened on Friday at 08:00 GMT when the flash S&P Global business PMI figures come out, even though growth concerns have barely affected the euro so far. A negative surprise in the data could press EURUSD instantly back below 1.0900.
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