Although inflation has been a common theme the past few months, this week in particular is volatile for the EUR/GBP. As CPI data from the UK came out and ECB members trying to talk down fragmentation in the Eurozone, there is high concern regarding interest rates. With inflation as high as 8.1%, the ECB is already pre-committed to a 25 bps hike at the July meeting. However, this opens opportunity for fragmentation which means that interest rates in some countries (the peripherals) may rise faster than in other countries (the core)
As the ECB called an emergency meeting to combat, the results are the following:
The ECB would be flexible in allowing reinvestment redemptions on the PEPP portfolio
To mandate a committee to help design an anti-fragmentation instrument
If the UK Retail Sales data results come out worse than expected, EUR/GBP might shoot upwards and surpass recent highs. It will be interesting to see how EUR is affected by all these factors. As well as, it is important to understand that all trading increases risk.
Recommendations for new traders? Stay up to date with the data release and just watch and experience the charts, or maybe place a limit order on either side and get some demo skin in the game?
It’s a great idea to stay up to date on market events such as data releases. When looking at charts, it might be beneficial to understand different trend lines and patterns. There are great resources out there including articles on Babypips. You can also take a look at the following link to learn about some educational material that we have on our website:
However, the best way to get your feet wet and practice is by opening a risk-free demo account. You have the opportunity to practice using the platform as well as test some of your own strategies. You can open a demo account by using the following link and scrolling towards the bottom: