Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

The vast majority of retail client accounts lose money when trading CFDs.

You should consider whether you can afford to take the high risk of losing your money.

The vast majority of retail client accounts lose money when trading CFDs.
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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
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EURGBP Rises After Hawkish ECB Meeting

EURGBP had the potential to confirm a recent bottom, as we noted earlier this week. 

A 50 bps interest rate hike from the European Central Bank and a hawkish outlook were enough to spark gains in the pair. 

EURGBP – Daily Chart

EURGBP – Daily Chart1

The euro versus the British pound can rally towards the 0.87 level, where a descending trendline resistance awaits. 

Expectations for a 50 bps hike were priced in. Still, the timing of the start of quantitative tightening is what most traders were looking for, with expectations for a 'grey' 'first quarter of 2023' range being expected. 

The 50 bps hike followed similar moves by the Federal Reserve, SNB, and BoE decisions in the last 24 hours. The guidance that interest rates "will still have to rise significantly at a steady pace" was a hawkish tone for traders. 

Additionally, the ECB said it will continue to be flexible in its PEPP reinvestment. They also added that QT will begin in March at a "measured, predictable pace," with the average monthly decline in bonds will amount to 15 billion euros until the end of the second quarter. 

The Bank of England also hiked interest rates by 50 bps this week, but there were more policy comments from the ECB. The ECB also raised its inflation forecasts and said it would remain above target into 2025. 

The Bank of England hiked interest rates to 3.5% in the ninth-consecutive increase. Markets had expected the move after the Bank's governor and Chief Economist said "more needed to be done" to get inflation under control. 

The BoE's accompanying report said several indicators pointed to a weakening economy since summer. It expects a 0.1% contraction in GDP for the last quarter of 2022, which would officially mark a recession in the UK economy after a 0.2% contraction in the third quarter. The economic downturn is expected to last into 2023. 

Friday brings a final reading of core inflation for the eurozone, with the number likely to be close to the 5% initial forecast. The euro should continue to see a boost from the ECB comments into next week.

Last Updated: 16/12/2022

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


 

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