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Fed vs ECB vs BoE


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It’s only March, but so much has changed on the interest rate front. Analysing the current stance of the Fed, ECB and BoE, and how FX traders should position themselves, given the current consensus surrounding interest rates.

 

Written by: Angeline Ong | Financial Analyst, Presenter and Content Editor, London
 
Publication date: 

(AI Video Summary)

Important changes with interest rates

The head of the Federal Reserve, Jerome Powell, has been doing what was expected and there's some mixed economic data in the US that makes it more likely for interest rates to be cut in June. As a result, the value of the US dollar has gone down.

On top of that, the European Central Bank (ECB) has also hinted at the possibility of cutting interest rates in both June and July. All of this makes it seem more likely that the Fed and the ECB will cut rates compared to the Bank of England (BoE). And because of this, the British pound has been doing really well against the weakening dollar.

GBP's growing value

Angeline Ong shows a chart with a red line that goes up to show how the pound's value has been growing since September 2022. This red line is backed up by three points where it touches, which confirms that the value of the pound is really going up. With the pound still on the rise and the interest rates suggesting that the Bank of England might delay any rate cuts, Ong suggests investing in the pound and betting that it'll keep doing well against both the dollar and the euro.

So basically, everything points to the British pound getting stronger and the US dollar and euro getting weaker. This means it's a good idea to put your money on the pound right now and hope it keeps growing.

 

 

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It 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. See full non-independent research disclaimer and quarterly summary.

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