1 Jul 2013
Flash: Busy week for central banks – UBS
FXstreet.com (Barcelona) - According to Mansoor Mohi-uddin, Head of Foreign Exchange Strategy at UBS, “In Europe this week, the Bank of England, the European Central Bank and the Riksbank all meet – only Sweden's central bank seems likely to consider cutting interest rates.”
Still, the euro and the pound may experience more significant weakness later in the year. The BoE will present 'forward guidance' on future monetary policy at its August Inflation Report. The ECB continues to leave open the option of negative interest rates.
“These could also result in turning points in the currency markets. But the ECB and BoE meetings in the week ahead are too soon to lead to major changes. In contrast, the Swiss franc does appear to be nearing a major turning point as the capital inflows that have been supported the currency since the credit crisis began in 2007 appear to be waning. Thus investors should be prepared for the risk of spikes in the EUR/CHF breaching this year’s highs of 1.26-1.27.”
Still, the euro and the pound may experience more significant weakness later in the year. The BoE will present 'forward guidance' on future monetary policy at its August Inflation Report. The ECB continues to leave open the option of negative interest rates.
“These could also result in turning points in the currency markets. But the ECB and BoE meetings in the week ahead are too soon to lead to major changes. In contrast, the Swiss franc does appear to be nearing a major turning point as the capital inflows that have been supported the currency since the credit crisis began in 2007 appear to be waning. Thus investors should be prepared for the risk of spikes in the EUR/CHF breaching this year’s highs of 1.26-1.27.”