The British pound strengthened against the weaker dollar on Wednesday as investors awaited Thursday’s Bank of England (BoE) meeting. The BoE policy announcement on Thursday will be the key event for sterling this week, with policymakers expected to raise interest rates for the fourth meeting, the first such run since 1997. The pound has weakened in recent weeks on expectations that the BoE may have to slow the pace of tightening as the central bank battles with above-target inflation and a cost-of-living crisis that is showing signs of weighing on economic activity. Immediate support is seen at 1.2530. A breakout below could take the pair towards 1.2450.
SELL STOP 1.2530/TP 1.2450/SL 1.2560
The Canadian dollar strengthened against the U.S. dollar on Wednesday as oil prices rose and investors took in stride a half-percentage-point interest rate increase by the Federal Reserve. The Bank of Canada has also been hiking rates, as a strong domestic economy adds to price pressures. Canadian data showed that exports and imports rose to record highs in March. The price of oil, one of Canada’s major exports, jumped as the European Union spelled out plans to phase out imports of Russian oil, offsetting demand worries in top importer China. In case of further growth in oil prices and correction of the US dollar, the Canadian currency will have a reason to keep rising. Immediate support is seen at 1.2700. A breakout below could take the pair towards 1.2650.
SELL STOP 1.2700/TP 1.2650/SL 1.2720
The euro gained against the U.S. dollar Wednesday after the U.S. central bank raised its benchmark overnight interest rate by half a percentage point, the biggest jump in 22 years. Fed Chair Jerome Powell said policymakers were ready to approve half-percentage-point rate hikes at upcoming policy meetings in June and July. However, Powell also said the Fed was not actively considering a 75 basis-point rate hike, tempering some market expectations for an aggressive tightening path. The contrast between the monetary policies of the ECB and the Fed will continue to put pressure on the euro quotes. Immediate support is seen at 1.0600. A breakout below could take the pair towards 1.0500.
SELL STOP 1.0600/TP 1.0500/SL 1.0630