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Will the ECB Hike Rates after Inflationary Pressures? Pound Awaits Article 50 Bill

07 March 2017 by FC Exchange

Pound Exchange Rate Awaiting Brexit Developments and Philip Hammond Budget

As the ongoing Brexit situation continues to develop, it’s likely that sterling will be very sensitive. Tuesday will see the House of Lords vote once again on the Article 50 bill – prime minister Theresa May is hoping it will pass unamended so she can begin official negotiations for the UK to exit the EU.

Wednesday 8th of March will see Chancellor to the Exchequer Philip Hammond deliver the first significant post-EU referendum Budget, as well as his first as Chancellor. This development has the potential to send ripples through the market.

Will the European Central Bank (ECB) Raise Rates as Inflationary Pressures Increase?

Eurozone inflation has picked up somewhat with the 19-nation bloc hitting the 2.0% threshold in February, following January’s 1.8%. With Germany’s rise in consumer prices, there’s been speculation that the ECB may have to increase its bank rate. Investors will look towards the March ECB meeting for the possibility of a rise; however, there’s very mixed speculation as to whether the central bank will increase rates.

Chief European and UK economist at IHS Markit Howard Archer commented: ‘We believe the ECB will remain wedded to its current monetary policy stance. The ECB has made it very clear that it wants to see sustained, decisive evidence that underlying Eurozone inflationary pressures are picking up.’

Disclaimer: This economic update is provided by FC Exchange a Global Reach Group Company, industry leaders in foreign exchange. Authorised affiliates are permitted to reuse content.

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