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Is ECB debate shifting to interest rates?

business-articlesIs ECB debate shifting to interest rates?
  • Expected fall in home loans likely to weaken GBP
  • Nouy speech in focus amid talks of rate hike discussion
  • Fed speeches may lift USD
UK mortgage approvals likely to slide

According to economists, UK Finance will report this morning that after a surprise uptick in January UK mortgage approvals will have fall back again last month.

Current forecast put the total number of home loans approved by banks in February at around 36,000, down from 40,000 at the start of the year.

This will see mortgage approvals match a five-year low struck in December and will see approvals move even further away from the long-term average of 51,000.

Markets fear that the number of mortgages will continue to slide this year as the Bank of England begins to accelerate the pace of monetary tightening.

ECB’s Nouy to Speak

The European Central Bank (ECB) will be back in focus at the start of this week’s session, with the bank’s Chair of the Supervisory Board, Danièle Nouy scheduled to speak later this afternoon.

EUR investors will likely be hoping to hear more about the ECB’s plans to wind up its quantitative easing programme following reports last week that policy makers are shifting their debate from the tapering its bond purchases towards increasing interest rates.

However markets are likely to be left disappointed if they expect any major revelations from Nouy’s speech, with the euro possibly sliding if she remains tight lipped about any rate hike plans.

Will Fed Speeches Support USD?

The ECB won’t be the only central bank in the spotlight today as investors also await speeches from the Federal Reserve’s Dudley and Mester.

While the Fed indicated last week that it expected to maintain its current pace of monetary tightening of up to three rate hikes a year, investors will still be keen to learn more about the policymakers’ outlook for the wider US economy.

This could see the US dollar tick higher should they suggest that inflation or wage growth is likely to pick up in the coming months.

Upcoming Data

Monday, 26 March, 2018
09:30                     GBP Mortgage Approvals
14:00                     EUR ECB Nouy Speech
17:30                     USD Fed Dudley Speech
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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