Market Report 22-04-2022

Published: 22/04/2022 By ECAP

Sterling sinks to its lowest point since November 2020 following the dovish comments made by Andrew Bailey and less than impressive retail sales data. Following March inflation data, markets were expecting a hawkish stance from the Bank of England governor Andrew Bailey, however, Bailey made comments about the concern of impact of raising prices on UK growth, mentioning a risk of slowdown in the labour market and even recession. Further to these comments, this morning we saw the UK retail sales data come in at a printed -1.4% in march compared to the forecast -0.3%. These two individual events combined has resulted in Sterling pushing under the 1.29 mark against the Dollar and seemingly remains under pressure.

FOMC chair Powell said yesterday that it was ‘absolutely essential’ that the Fed brings down inflation, and that the bank was committed to raising rates ‘expeditiously’ in order to achieve its goals. In the markets view, this all but confirms that the Fed will hike rates by 50 basis points at its next policy meeting in less than two weeks time. Indeed, markets are now pricing in 250 basis points of interest rate hikes from the Fed during the remainder of the year, a repricing that has kept the dollar well supported against its major peers. Amid the broadly stronger dollar, EUR/USD has continued to languishing around the 1.08 level this morning.