Swiss National Bank has already announced a 50 bp rate hike but there are 2 more major central banks, who are also scheduled to make rate decision today and who are also expected to deliver 50 bp rate hikes - Bank of England (12:00 pm GMT) and European Central Bank (1:15 pm GMT). As both economists and money markets see 50 bp rate hike to be a done deal, market reaction will depend on the communications of the central bank a lot. This was the case with yesterday's FOMC decision and will be the case with BoE and ECB today as well. However, recent data suggests that there is a chance that ECB will deliver hawkish surprises and hiked by 75 basis points instead of 50 bp. On the other hand, cost of living crisis in the United Kingdom boosts odds for a softer stance from BoE.
Taking a look at EURGBP at D1 interval, we can see that the pair attempted to break below the 0.8580 support zone, marked with a 200-session moving average (purple line), but failed to do so. Pair is bouncing off the zone today and is expected to become much more volatile in the early afternoon when BoE and ECB announce their rate decisions. Should we see a hawkish surprise from ECB, the pair could spike towards the resistance zone in the 0.8700 area, especially if BoE delivers dovish surprise as well.
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Source: xStation5
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