In what might be called a surprise turn of events, a hawkish ECB relative to a dovish BOE has fueled an aggressive move higher for EUR/GBP. The pair has been trending lower in an orderly channel for almost 1 year now, but could now eye an upside breakout as the central banks diverge.
ECB President Lagarde’s speech on Wednesday is sure to add more volatility to this pair, and could determine whether or not we see a breakout.
Check out this latest insight into EUR/GBP by one of our senior analysts, including key levels to watch over the coming days:
Before the modern era of insanity since 2008, you could be put in an asylum to suggest that ECB is being Hawkish by raising interest rate TO ZERO!
All that QE in the West has resulted in the chickens coming home to roost, a phenomenon known as inflation. Whatever did any of our central planners think was going to happen when they kept saying "printer goes whhhhhiiiiiiirrrrrrrrrrr for almost a decade?
Taking this to its logical conclusion, this is just another tax on the cautious, average Joe, who thinks that an average price increase of 7% a year was a good investment by buying his home on a mortgage whose interest rate has been typically 3% or less for a decade. 7% is just keeping up with inflation, just like the long term average price of an ounce of gold has done very much the same.
The shame is that the inflation is designed into the system as a stealth tax. Not satisfied with income tax, VAT, corporation tax, not to mention national insurance contributions, council tax, road tax, and soon to come wealth tax, it’s always the inflation tax that is the last one seen by the poor unsuspecting public.
And “encouraging our citizens to spend - on operating expense or luxury goods whose value falls to zero” is another element of irresponsibility supported by our central planners. How about getting back to basics and advising to only buy useless stuff when you can afford it. It’s so easy to borrow £10K on a credit card, much easier than paying back the interest at 39% APY or worse. Hawkish my ar*e