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On May 17th, TsLombard stated that an aggressive tightening cycle is unlikely. Faced with the oil price shock, the extent of policy tightening by global central banks is likely to be quite limited. In Europe, the energy shock is already dragging down economic activity. The UK labor market has been volatile for some time, and hiring sentiment in Europe is becoming increasingly weak. In our view, the tightening力度 of the ECB and the Bank of England this year will be less than the market expects, and this possibility is currently underestimated. In the US, the likelihood of the Federal Reserve implementing policy tightening in the short term is small, and even if it does, it is almost certain to be before 2027.On May 17, the Hong Kong Special Administrative Region government announced the activation of the alert level under the "Ebola Virus Preparedness and Response Plan" to protect public health. The Centre for Health Protection of the Hong Kong Department of Health stated that it has proactively sought further information from the WHO, the Africa Centres for Disease Control and Prevention, the Democratic Republic of Congo, and the health authorities of Uganda.On May 17, the Israel Defense Forces (IDF) said that on May 16, the IDF killed a commander of the Hamas operations headquarters.May 17th - A recent Japanese public opinion poll shows that, faced with insufficient crude oil supply, 70% of Japanese citizens believe the government should call for energy conservation measures. Japans recent sharp decline in crude oil imports, necessitating two releases of oil reserves, has sparked widespread concern. Kyodo News conducted a telephone survey from May 16th to 17th, asking for public opinion on issues such as insufficient supply of crude oil and its derivatives. The survey results, released on the 17th, show that 70.5% of respondents believe the Japanese government should call for measures to conserve energy and resources. Regarding naphtha, a key raw material for plastics production, 70.6% of respondents expressed "unease" due to insufficient supply.On May 17th, in the second round of the WorldSSP class at the 2026 World Superbike Championship (WSBK) Czech Republic round, Valentin Debis, a French rider from Chinese motorcycle manufacturer Zhang Xue Motorcycles, won the championship again. This marks his second time this season achieving a perfect record in two rounds of a single race, following his victory in Portugal. This is also the fifth championship for the rider and Zhang Xue Motorcycles this season.

GBP/USD seeks to regain 1.2300 as higher UK CPI strengthens the case for a rate hike by the Bank of England and the USD retreats

Alina Haynes

Mar 23, 2023 15:00

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During the Asian session, the GBP/USD pair attempts to reclaim the resistance level at 1.2300. Following a vertical correction, the Cable has recovered to near 1.2260 as the market anticipates that the absence of hawkish interest rate guidance from Federal Reserve (Fed) chair Jerome Powell while addressing the economy at the monetary policy meeting indicates that the Fed is close to ending its policy-tightening spell.

 

S&P500 futures have generated some gains in the Asian session following a decline on Wednesday as a result of Fed Powell's confirmation that the fight against intractable U.S. inflation will continue. Chairman of the Federal Reserve Jerome Powell has ruled out rate cuts in 2023, citing the difficulty of controlling inflation. In addition, US Treasury Secretary Janet Yellen's statement that the government "does not plan to insure all uninsured bank deposits" heightened fears of a banking sector collapse.

 

Following a recovery move, the US Dollar Index (DXY) has retreated on expectations that additional credit tightening to protect banking institutions will reduce overall demand, economic activity, and inflation. In the interim, the demand for US government bonds has increased as a result of expectations that US Janet Yellen will end further policy restrictions and reduce support for all bank deposits.

 

On the front of the United Kingdom, the Pound Sterling is likely to maintain its strength as the Bank of England (BoE) is scheduled to raise rates for the eleventh consecutive time. Governor Andrew Bailey of the Bank of England is expected to raise interest rates by 25 basis points (bp) in response to rising food and non-alcoholic beverage prices, as well as rising energy costs, which have contributed to inflation in the United Kingdom.

 

In the midst of global banking turmoil, the Bank of England's (BoE) interest rate decision will be difficult, as policymakers were divided over whether to raise rates further or maintain them at their present level.


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