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  • Writer's pictureMike Paterson

Bring on the BOE and ECB

Thursday 2 February 2023

Last night the US Federal Reserve duly delivered a 0.25% rate hike as expected with some slightly hawkish tones to the accompanying statement. Cue a little bit of USD demand until Chairman Powell in his presser said the "disinfltionary process has started" and FX markets sold the Greenback rapidly posting some new recent lows. A bit of re-adjustment since understandably as the second-guessing continues. Equities staged a strong rally but off their highs and in retreat again as I type.

BOE & ECB follow up today with both expected to deliver 0.5% hikes but with the ECB factored in to remain more hawkish than the BOE. Indeed I would arge there's a case to suggest the BOE could surprise with 0.25% and the ECB could spring a dovish tone in Lagarde's presser remarks. Remember all this and recent moves/factoring will be pure conjecture so focus on the price action and let the algos do the heavy lifting/dropping. The important thing is to identify your preferred risk/reward entry/exit levels prior and be poised to execute.

US NFP data tomorrow will add to the FOMC hype but meanwhile WTI has found a strong cap into $80.00 and now $77.50 but holding $76.25 so far. Gold held the old $1920 support line and and had its own rally through $1935 to test $1960 amid the dovish Powell tones and now forming a base at the pivotal $1950 area. Ukraine/Russia war continues to be the elephant in the room amid other geo-political risk.

GBPUSD: Holding 1.2280 again prior to and post-FOMC where I had warned again of bids building yesterday but guess what though? Yep, capping again around 1.2400 helped by strong EURGBP demand still on the potential BOE/ECB diversifiocation and re-sells duly placed. Keep an eye on GBP crosses still and BOE of course! EURGBP: Strong rally again up through 0.8880 yesterday post FOMC and helping to cap GBPUSD as EURUSD took off and testing 0.8910-20 so far. Looking underpinned still but expect some two-way business as CBs deliver their latest moves. GBPJPY: Finding support around 159.00 after capping at 160.00 then 159.75 amid the generally soggy GBP tones and in retreat again this morning as GBPUSD falls even further.

Plenty more to read in my full report which you can receive by emailing Also for details on my 1-2-1 mentoring services for traders.

Interbank rates: 08.35 GMT

GBPUSD 1.2378

EURUSD 1.1000

EURGBP 0.8900

GBPEUR 1.1243

GBPCAD 1.6387

GBPCHF 1.1214

GBPZAR 21.0660

GBPHKD 9.6129

USDJPY 128.80

EURJPY 141.65

GBPJPY 159.27

EURCHF 0.9995

EURHKD 8.5501

AUDUSD 0.7145

NZDUSD 0.6519

USDCAD 1.3273

USDCHF 0.9087

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