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Central bank meetings offer further market volatility

Central bank meetings offer further market volatility

Last week saw markets continue to be plagued with instability as traders remain wary of developments in relation to the war in Ukraine. However, there were additional factors impacting markets including US inflation hitting fresh 40-year highs. The ECB surprised markets by changing its policy direction, paving the way for rate hikes before the end of the year which unsettled the euro.

The above initially helped the euro, with EUR/USD rising to $1.11 – this was not sustained though as the currency fell back down into the lower half of $1.09-1.10. Sterling was holding a weaker tone last week, without any obvious rationale. As a result, EUR/GBP was trading up near to 84p and GBP/USD below $1.31.

As we look to the week ahead, market attention will be divided between ongoing developments regarding Ukraine and central bank meetings, as both the Fed and BoE are expected to hike rates by 25bps.

The BoE meeting is due to be held on Thursday, while the Fed meeting is set to take place on Wednesday, outside of European trading hours. To protect yourself against this, the use of ‘market orders’ is crucial – please speak to one of our team to discuss.

So another busy week ahead with plenty of potential for market volatility.

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