The UK index closed higher yesterday despite warnings from the BoE governor Andrew Bailey over surging inflation and a worrying rise in food pieces. Andrew Bailey insisted that the BoE would raise interest rates until inflation falls from the expected double-digit peak to the central bank’s 2% target.

EUR/GBP fell 0.7% last week, which was more of a euro weakness story than owing to significant pound strength. The pound traded broadly lower versus its major peers on recession fears and as Brexit concerns returned.

EUR/USD steadies after falling to a 5-year low in the previous session and posting its biggest loss since March 2020. The pair tumbled 1.2% yesterday after US wholesale inflation data sparked fears of a more aggressive Fed and as tensions between Russia and the West escalated, hitting demand for the euro.

The FTSE closed up by triple digits yesterday, booking gains of 1.4%, helped by early gains on Wall Street following US inflation data. Today the focus is on UK GDP data which is expected to show solid growth across Q1, but that would be mainly owing to solid growth at the start of the year.

The rollercoaster on Wall Street continued last night, with stocks rebounding modestly ahead of key US economic data. While selling ease, sentiment remains fragile amid concerns that the Fed could struggle to raise interest rates sufficiently without choking economic growth.

Gold started the week on the back foot, falling 1.5%, as risk aversion drove trade, and the USD was the safe haven of choice.

AUD/USD is falling for a third straight day. Since Thursday, the pair has tumbled 3.4% as the USD surged on the back of the Federal Reserve  50bp rate hike, expectations for a more hawkish Fed action to come, and strong US  jobs report.

The Nasdaq made a spectacular reversal in the previous session, wiping out the gains from the Fed’s decision day.  Federal Reserve Chair Jerome Powell’s comments that the central wasn’t considering a 75-basis point rate hike boosted stocks on Wednesday.

GBP/USD rose 1% in the previous session after the Fed hiked interest rates by 50 basis points, as expected, and started a quantitative tightening program. However, the Fed Chair Powell pointed to a less aggressive approach to monetary policy tightening going forward, removing the prospect of a 75 basis point hike in the coming meeting, that 50 basis points are likely.