Currency Note

All eyes on Fed meeting today

By Erin Harding November 3rd, 2021

The Federal Reserve will conclude its latest monetary policy meeting this evening. It’s widely expected that officials will announce the tapering of the huge bond-buying program, scaling back economic aid and making plans for a post-pandemic future.

Any comments surrounding tapering, inflation and interest rates could impact the dollar and other currencies.

The pound is still weaker this morning ahead of the Bank of England’s monetary policy meeting, which will take place tomorrow. It’s now thought that interest rates won’t be hiked, despite this being the expectation previously.

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GBP: Pound weaker ahead of BoE meeting

The pound is still weaker against the euro this morning and has fallen below the 1.18 mark.

This is due to a change in expectations ahead of the Bank of England’s meeting tomorrow. The markets had initially anticipated an interest rate rise; however, it’s now thought that rates won’t be hiked at tomorrow’s meeting.

Later today, services and composite PMI figures will be released for the UK, revealing how the services and manufacturing industries performed in October. A slight improvement is expected in both areas.

GBP/USD chart over past year

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EUR: ECB President Lagarde to speak today

The euro is stronger against the pound and slightly weaker against the dollar this morning ahead of the Federal Reserve’s meeting this evening.

Yesterday, manufacturing PMI figures were released for Germany and the Eurozone. Both readings were revised slightly lower in October. Supply bottlenecks and material shortages remained a major hindrance to manufacturers.

It’s a light day for data releases in the Eurozone. However, President of the European Central Bank, Christine Lagarde, will speak later today.

USD: Dollar steady ahead of Fed meeting

The dollar is largely unchanged this morning but is still strong against a basket of currencies ahead of the Federal Reserve’s monetary policy meeting, which will take place this evening.

It’s thought that officials will announce the start of the tapering of their $120 billion monthly bond-buying program. The markets will be listening out for any comments surrounding inflation and interest rates, although officials have already said that interest rates won’t be hiked until bond buying ends.

There is a series of data releases leading up to the meeting, including PMI figures, which are expected to show that the services and manufacturing industries have slowed slightly in October.

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