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On April 26, UBS said that the current market thinking is consistent with the banks basic forecast, that is, tariffs will be reduced from the current announced level for the rest of the year, and the Federal Reserve will further cut interest rates this year. However, as uncertainty in trade, economy and Federal Reserve policy remains high, expected volatility also remains high. However, UBS believes that the US stock market is attractive, and the S&P 500 index target continues to be 5,800 points by the end of the year. UBSs current basic forecast is that the Federal Reserve will cut interest rates by 75 to 100 basis points this year, but in the short term, the Feds policy flexibility seems more limited because it must balance concerns about economic growth with the risk of inflation recovery.According to AFP: Senior officials said that Ukrainian President Zelensky and US President Trump may meet in Rome.Spokesman for Ukrainian President Volodymyr Zelensky: Ukrainian President Volodymyr Zelensky has arrived in Rome to attend the Popes funeral.According to the Ukrainian National News Agency: Russian troops launched 414 attacks in the Zaporizhia region at night.Market news: Ukrainian President Zelensky and his wife arrived in Rome.

The EUR/GBP is fluctuating close to 0.8750 as focus shifts to UK inflation and BoE policy

Alina Haynes

Mar 20, 2023 13:22

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The EUR/GBP pair is exhibiting a lackluster performance around 0.8750 during the Asian session. As investors prepare for the release of the Bank of England's (BOE) interest rate decision and the United Kingdom's Consumer Price Index (CPI) this week, the cross has moved sideways.

 

Despite the fact that the headline asserts that UBS has revitalized Credit Suisse, the cross appears to be weak. Credit Suisse shareholders will receive one share of UBS for every 22.48 Credit Suisse shares they own, valuing the bank at $3.15 billion (£2.6 billion), according to BBC News. The Swiss National Bank (SNB) stated that the agreement was the most effective means of restoring market confidence and mitigating economic risks. Additionally, the BoE endorsed the "comprehensive set of actions."

 

The consensus opinion on the street is that Governor Andrew Bailey of the Bank of England (BoE) will provide a pessimistic outlook for the interest rate decision amidst concerns of banking turmoil, which will be his top priority.

 

Rabobank analysts also anticipate a 25 basis point (bps) rate hike and caution that the market has not fully factored in this scenario. Andrew Bailey, governor of the Bank of England, would raise rates by 25 basis points to 4.25 percent.

 

Prior to that, the UK inflation data released on Wednesday will be attentively monitored. The annual headline CPI is expected to decline from 10.1% to 9.8%, according to projections. At 5.8%, the core CPI, which excludes the cost of fuels and food, would not change. It should be aware that persistent inflation in the United Kingdom is due to rising food prices and a labor shortage.

 

After the European Central Bank (ECB) raised interest rates by 50 basis points (bps) last week, Gediminas imkus, a member of the ECB Governing Council, stated on Friday that "the terminal rate has not yet been reached" For further deflation, extremely persistent inflation in the Eurozone requires higher interest rates.


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