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The Federal Reserve's "Eagle Claw" tear apart the pound and the United States! Can the Bank of England perform tonight_reversal the defeat?
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange]: The Federal Reserve's "Eagle Claw" tear apart the pound and the United States! Can the Bank of England perform tonight_reversal the defeat?" Hope it will be helpful to you! The original content is as follows:
Asian market market review
In the early morning of Thursday, as the Federal Reserve kept interest rates unchanged, implying that the pace of interest rate cuts will slow down in the future, and expected "quite high inflation" to occur in the next few months, the US dollar index once stood above the 99 mark. As of now, the US dollar price is 99.06.
Iran-Israeli conflict-① Khamenei said that Iran will not surrender and will not accept imposed wars or peace. ② It is reported that if the United States interferes in the conflict between Israel and Iran, Russia's threat will intervene. ③US media: Trump privately approved the attack plan against Iran, but did not issue a final order. ④ The U.S. Embassy in Israel began to evacuate Israel. ⑤ Trump said Iran requested negotiations with the United States, but Iran denied it. Subsequently, US media reported that Iran would accept the proposal for talks with the US. ⑥Trump: The United States does not seek a ceasefire, but requires Iran to have no nuclear weapons. The door to negotiations with Iran remains open. It is believed that Iran will only take a few weeks to obtain nuclear weapons. Don't want to get involved in the situation in the Middle East. Previously, Trump was vague about whether to intervene in the conflict. ⑦ German diplomatic source: Germany, France and Britain's foreign ministers and senior EU diplomats will hold nuclear negotiations with Iranian foreign ministers in Geneva on Friday.
Feder rate interest rate settlement in June - keeps interest rates unchanged for the fourth consecutive time, the dot chart shows that interest rate cuts twice this year, but is expected to beThe number of officials who did not cut interest rates rose to seven, and expectations for a rate cut for next year were cut to one. Powell continued to yell at uncertainty, and the current economic situation was suitable for wait-and-see. He also expects tax-driven inflation to rise in the eouu.cning months.
Trump reiterated that the Fed should cut interest rates: it should cut 200BP, and it would be very good to cut 250BP.
U.S. regulators plan to relax capital rules and lower capital buffers by 1.5% to promote Treasury bond transactions.
The US government resumes application of foreign student visas.
German Chancellor Merz: He hopes to reach an agreement on the US-EU tariff issue in the next few days.
Putin: The negotiation team on Russia-Ukraine is maintaining contact, and the next meeting may be held after June 22.
China reduced its holdings of U.S. bonds in April, while Britain and Japan increased their holdings. Foreign investors' U.S. Treasury bond holdings are close to record highs.
Summary of institutional views
Mitsubishi UF: The Bank of England is a foregone conclusion, and the voting ratio may have hidden secrets
The Bank of England will keep interest rates unchanged at this week's meeting, and we do not expect any changes in the guidance. But this could be one of the more interesting "pause rate cuts" meetings in the rate cut cycle, as recent data show that labor market conditions are turning to weaker and growth momentum is weaker. Most notably, private sector wage growth slowed and employment appears to be declining. This situation that may make the Bank of England dovish may ease due to external circumstances. Trade risks have eased since May, and geopolitical developments are pushing up energy prices. Against this backdrop, the Bank of England may still be keen on retaining options and stressing that policies are not on the preset path.
However, recent domestic data opened a door to the Bank of England that may see some subtle changes in information transmission, and the bank's tone last time was a bit tough. The voting divisions may also reflect greater confidence in the potential inflationary decline process. The Bank of England is expected to pass a 6-3 decision to keep interest rates unchanged, which is different from the 8-1 vote ratio that suspended interest rate cuts in March and strengthens expectations that the Bank of England will extend the easing cycle for the rest of the year and even longer.
The pound has been weakening until this week's Bank of England meeting. The euro is expected to close higher for the sixth consecutive trading day, while the upward momentum of the pound against the dollar has stalled below 1.3600. If the Bank of England voted 6-3 and decided to keep interest rates unchanged, three people opposed another rate cut, which should trigger further weakening of the pound. However, if there is no significant change in the tone or guidance, the scale of the pound sell-off will be narrowed.
eouu.cnprehensive market evaluation: Rate cuts should be cut early rather than later, the Federal Reserve has not paid attention to...
Eric Teal, chief investment officer of eouu.cnericaWealth Management, said that we still expect interest ratesand inflation will rise in the future. Monetary policy response is expected to be delayed, and immigration policies, manufacturing production reflux, and budget and deficit concerns may drive higher real interest rates and expected inflation. The economy is not very sensitive to interest rates and we believe that a large number of easing policies are needed to affect consumer behavior.
Jamie Cox, managing partner at Harris Financial Group, said the real risk is growth, and interest rate cuts should be reduced sooner rather than later. The Fed continues to exaggerate the inflation story, without paying attention to the rapidly increasing weak demand. Although the dot map predicts a three-rate cut by 2026, it is more likely that the rate cut by 3 times by the end of 2025.
TD Securities: Under the time decay effect, the window for interest rate cuts this year is actually narrowing
The market response is relatively flat, although before the Federal Reserve released the dot chart, at least from economists' expectations, there were already differences on the number of interest rate cuts in 2025, mainly concentrated between one and two. But the market does not seem to interpret the dot plot that ultimately maintains the "two rate cuts" as a clear dovish signal. I think part of the reason is the statement itself, which overall continues the Fed's previous "waiting and watching" tone. One factor in the dot matrix diagram we see now is the "time attenuation effect". When we made the forecast in March, we thought that there were still many interest rate meetings in 2025 that could be used to cut interest rates; but now we look at it, there are not many meetings left before the end of the year. If the Fed does not start cutting interest rates for a long time, the interest rate cuts originally expected to be carried out in 2025 will have to be postponed until 2026.
Dutch International Bank: Bank of England is in a dilemma! The overall decline in inflation and the intensification of geopolitical risks...
The UK released May's Consumer Price Index (CPI) data on Wednesday afternoon. The overall CPI annual rate slowed to 3.4%, slightly lower than the market expectations of 3.5%. The annual rate of core CPI is 3.5%, the same as market expectations. The CPI annual rate of the highly-watched service industry is 4.7%, slightly lower than the market expectations of 4.8%.
The Bank of England has recently turned to a hawkish stance and has not been supported by economic data so far, as employment, economic growth and current inflation data are all soft. But that increases the risk of the Bank of England taking a slightly dovish stance on Thursday, although rate cuts are still unlikely.
At present, there are many reasons to support the strengthening of the European pound. Geopolitical risks usually have a greater negative impact on the pound than on the euro, and the recent data streams are also negative for the pound. Unless the Bank of England gives a more hawkish signal tomorrow, the EU and the UK are likely to rise to 0.86 levels.
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