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• As expected, the BoE today kept the Bank Rate unchanged at 4.50%.
• The vote split was slightly to the hawkish side but we do not see this as a broad shift in sentiment within the MPC.
• Overall, the statement revealed that BoE still favours a "gradual" and "careful" approach to easing monetary policy whilst highlighting heightened uncertainty.
• The market reaction was modest with Gilt yields tracking slightly higher and EUR/GBP moving lower on the hawkish vote split.

As expected, the Bank of England (BoE) decided to keep the Bank Rate unchanged at 4.50% today. The vote split had a hawkish twist to it with 8 members voting for an unchanged decision and Dhingra voting for a 25bp cut.

The BoE retained its previous guidance noting that "a gradual and careful approach to the further withdrawal of monetary policy restraint is appropriate". As expected, the BoE highlighted the elevated uncertainty noting that "economic uncertainties, both globally and domestically, had risen recently". The BoE likewise kept the wording that "monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further". On the inflation front, the MPC flagged an increased focus on the pass through from wage growth to non-energy core goods, where focus has previously been centred around primarily service inflation.

Overall, we think the communication today supports our call of a continuous gradual approach to the cutting cycle. We expect the next 25bp cut in May with the Bank Rate ending the year at 3.75%. While we have previously highlighted that we saw the risks skewed towards a swifter cutting cycle in 2025, we now see the risk picture as more balanced.

Rates. Gilt yields moved higher across the board on the hawkish vote split. Markets price 16p worth of cuts for May and around 50bp by YE 2025, cf. the margin table. We highlight the potential for BoE to deliver more easing in 2025 than currently priced, expecting three additional cuts this year with the next cut in May.

FX. EUR/GBP moved lower on the announcement with the hawkish vote split taking centre stage. The still cautious guidance delivered today highlights the more gradual approach of the BoE. More broadly, we expect EUR/GBP to move lower in the coming quarters driven by a relatively hawkish BoE compared to G10 peers, an investment environment characterised by continued tight credit spreads and a positive correlation for GBP to a USD positive investment environment (which we expect will return). While we continue to expect a growth pickup in the UK delivered from a fiscal boost, the shift in fiscal stance in Germany leaves the impact from the relative growth outlook more muted for the cross. The key risks are reignited debt concerns and a more forceful policy easing stance from the BoE.

Markets

European markets took a different, more pessimistic view on yesterday’s Fed policy meeting compared to the US. They appear to have more attention to the (stagflationary) risks in the new forecasts instead of Powell’s reassuring message. European stocks dropped more than 1% with Wall Street suffering from spillover effects. But contrasting with the previous sessions, it’s US sentiment that now improved for the better. US equities quickly swapped losses for minor gains. Core bonds strengthened with Treasuries outperforming Bunds. US rates extend the post-Fed drop by declining 2.3-4.2 bps across the curve. They are off intraday lows though, helped by consensus-crushing existing home sales. Bunds had some catching up to do with Treasuries but were unable to post additional gains after gapping higher at the open. German yields ease between 1.6 and 3.7 bps against the backdrop of an important European summit on the matter of defense spending (and how to fund it), Ukraine and European competitiveness. Meanwhile several ECB members hit the wires, including president Lagarde. She stuck to the March message. Policy is “meaningfully less restrictive” and the ECB is data-dependent. Lagarde noted that elevated uncertainty (over trade) prohibits the ECB from committing to anything. Dutch governor Knot said the ECB is close to a neutral stance and is open-minded on the April decision. He cited uncertainty surround a range of sometimes opposing factors such as the impact from tariffs and the “budgetary expansion in the largest member state”. Estonia’s Muller believes tariffs pose upside risks while Portugal’s Centeno said it’s “more dubious”. USD and JPY take the lead on FX markets. EUR/USD slips to 1.083, DXY is testing 104. Sterling gains against the euro (EUR/GBP 0.835) after a slightly stronger than expected labour market report and the Bank of England’s status quo in a 8-1 vote. One member favoured a cut. Two members who voted for cuts at all three previous meetings today supported the halt, prompting a “hawkish pause” label to the decision. To hold the rate at 4.5% after February’s cut was a compromise between higher inflation and stronger-than-expected GDP growth versus “business survey indicators [that] generally continue to suggest weakness in growth and particularly in employment intentions.” Intensifying global trade policy uncertainty is obviously not helping in making a clearcut decision. So the BoE retained “a gradual and careful approach to the further withdrawal of monetary policy restraint […].” UK yields left the intraday bottoms (up to -7 bps) after the policy announcement and with a US-driven sentiment improvement now even trade flat.

News & Views

The Swedish Riksbank kept its policy rate unchanged at 2.25% and assesses that the rate will remain at this level going forward (over the policy horizon according to updated forecasts i.e. until 2028 Q1). That way, it officially puts an end to the cutting cycle that started slightly under a year ago at a policy rate of 4%. CPIF inflation has become higher than expected and is assessed to remain at between 2% and 3% for the rest of the year. The Swedish economy is in a recovery phase, but the rebound in the labour market will take a little longer. The overall growth and inflation outlook remains intact compared with December, which is obviously surrounded by a higher degree of uncertainty. The Executive Board stresses vigilance regarding contagion effects that could lead to inflation not falling back as expected. Today’s message didn’t really came as a surprise. EUR/SEK changes hands around 11.03. A reflationary-inspired euro helped avoid a break below the 11 support area earlier this month.

The Swiss National Bank lowered its key rate as expected by another 25 bps to 0.25%. The new inflation forecast has hardly changed since December. Without the rate cut, the forecast would have been lower in the medium term. It puts average annual inflation at 0.4% for 2025, 0.8% for 2026 and 0.8% for 2027, based on a 0.25% policy rate over the forecast horizon. That’s within the SNB’s 0%-2% inflation target. The SNB expects GDP growth of between 1% and 1.5% for this year and 1.5% in the next. Domestic demand is likely to benefit from rising real wages and the easing of monetary policy. Moderate economic activity abroad could dampen foreign trade. SNB President Schlegel added that today’s cut had an expansionary impact, implying a lower probability of more action down the road. The SNB will remain active in the FX market if necessary, but recently received some help from a stronger euro in battling CHF-strength. EUR/CHF trades around 0.9565 with the bottom of the broad 0.93-0.97 trading range in place since the start of last year becoming ever stronger.

USDCHF: What Do the Fed and the SNB Say?

The USDCHF has been at the centre of attention following the monetary policy decisions of the Federal Reserve (Fed) and the Swiss National Bank (SNB). What can we expect now?

The Fed Holds Rates, but the Dot Plot Gives Clues...

Yesterday, the Fed kept rates unchanged at 4.25%-4.5%, citing economic uncertainty and inflation risks. Powell mentioned concerns about tariffs and immigration restrictions.

The Dot Plot showed that most FOMC members expect only two rate cuts in 2025. This suggests that the Fed intends to maintain control over inflation and avoid loosening too quickly.

The SNB Cuts Rates… and Could Keep Going

Meanwhile, the SNB surprised the market by reducing its interest rate by 25 basis points, bringing it to 0.25%, its lowest level since 2022. This is the fifth rate cut since 2024, signalling concerns over low inflation and economic risks.

Additionally, the SNB clarified that it is still ready to intervene in the forex market if necessary.

What Happens Next with USDCHF?

The divergence is clear: the Fed remains cautious with rate cuts, while the SNB continues to loosen its monetary policy. This could support USDCHF in the short term, although volatility will depend on upcoming macroeconomic data and market sentiment.

Will the dollar rebound, or will the Swiss franc resist? Stay tuned for the next moves!

Technical Analysis - USDCHF, H4

Supply Zones (Sell): 0.8842 // 0.89
Demand Zones (Buy): 0.8765

The recent SNB rate cut was the main driver of the price rally during the European morning, causing a breakout of the key H4 resistance at 0.8809, leaving a wide-range bullish candle with inefficiency (volume void) that the market typically corrects.

In this context, a pullback is expected to cover that area, seeking liquidity at the daily open (D1:O) 0.8776 and the Asian POC at 0.8765, demand zones (buy) that will likely be defended by bulls to trigger a new price rally towards the next supply zone at 0.8842, confirming the intraday bullish reversal. Only after breaking this level can we consider extending buys towards 0.89 and the next daily key resistance at 0.8926.

On the other hand, if the demand zone between 0.8776 and 0.8765 is decisively broken, the bullish trend will continue, as an increase in sell orders will likely lead to a break below December's support at 0.8735, extending the decline towards the psychological level at 0.87.

Technical Summary

• Bearish Scenario: Sell below 0.8809 with targets at 0.8777 and 0.8765, where we could return to buy if an intraday bullish reversal pattern forms on M5. If this doesn’t occur, sales will continue towards 0.8735 and 0.87 in extension.
• Bullish Scenario: Buy above 0.870 (waiting to form and confirm a reversal pattern on M5) with targets at 0.8842, 0.8864, and 0.89 in extension.

Market Picture

The cryptocurrency market has been on the rise, growing by over 5% since Tuesday and reaching a total capitalisation of $2.81 trillion. Optimists are hopeful that, after hitting recent highs, the market is ready to shift towards growth. However, despite this excitement, it’s important to note that the crypto market has yet to break above its 200-day moving average, currently sitting close to $2.9 trillion. A strong rally above this level could trigger an active buying phase, but there’s also a risk of bears setting up a trap, as they’ve done several times before.

Sentiment has improved, though. The Fear and Greed Index climbed back to the middle of its range by the end of the week, a level we haven’t seen in four weeks. This shift out of the extreme low zone could be the first sign of a trend reversal, suggesting there’s still plenty of room for growth.

Bitcoin has been showing steady progress, with a nice bounce on Wednesday. Thursday morning saw a brief spike, pushing the price of Bitcoin above $87,300, its highest point in two weeks. This was an attempt to break through the 200-day moving average, but the rally was short-lived. For Bitcoin to maintain momentum, staying above this key level is crucial. If it does, it could spark renewed interest in buying a variety of coins that have been in a correction phase for a while.

News Background

In the news, there’s a significant update regarding Ripple. The US Securities and Exchange Commission (SEC) has dropped its case against the company. Ripple’s CEO, Brad Garlinghouse, confirmed the SEC’s decision to drop the appeal, bringing an end to a case that had been ongoing for over four years.

Meanwhile, a report from Artemis and Dune reveals impressive growth in the stablecoin market. Over the past year, the total supply of stablecoins has increased by 63%, while monthly transaction volume surged by 115%, reaching a total of $35 trillion.

The developers of the non-custodial wallet TON Space have added the ability to pay network fees to Telegram Stars. This solution will simplify messenger users’ work with crypto and allow them to buy digital goods in Mini Apps.

Daily Pivots: (S1) 1.0859; (P) 1.0904; (R1) 1.0948; More...

Extended decline in EUR/USD suggests that a short term top was formed at 1.0953, on bearish divergence condition in 4H MACD. Intraday bias is mildly on the downside for deeper pull back to 38.2% retracement of 1.0358 to 1.0953 at 1.0726. Strong support should be seen there to bring rebound. Meanwhile, break of 1.0953 will resume the rally from 1.0176 towards 1.1274 key resistance.

In the bigger picture, prior strong break of 55 W EMA (now at 1.0675) suggests that fall from 1.1274 (2024 high) has completed as a three wave correction to 1.0176. Rise from 0.9534 is still intact, and might be ready to resume. Decisive break of 1.1274 will target 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. Also, that will send EUR/USD through a multi-decade channel resistance will carries larger bullish implication. This will now be the favored case as long as 1.0531 resistance turned support holds.

Daily Pivots: (S1) 0.8755; (P) 0.8783; (R1) 0.8803; More…

USD/CHF is still bounded in consolidation from 0.8757 and intraday bias remains neutral. In case of another recovery, upside should be limited by 0.8911 support turned resistance. On the downside, break of 0.8757 will resume the fall from 0.9200 to 61.8% retracement of 0.8374 to 0.9200 at 0.8690. Sustained break there will pave the way back to 0.8374 support.

In the bigger picture, rejection by 0.9223 key resistance keep medium term outlook bearish. That is, larger fall from 1.0342 (2017 high) is not completed yet. Firm break of 0.8332 (2023 low) will confirm down trend resumption.

Daily Pivots: (S1) 148.15; (P) 149.15; (R1) 149.69; More...

Intraday bias in USD/JPY stays neutral first. Price actions from 146.52 are seen as a corrective pattern. In case of another rise, upside should be limited by 150.92 support turned resistance. On the downside, firm break of 148.22 support will bring retest of 146.52 first. Sustained trading below 61.8% retracement of 139.57 to 158.86 at 146.32 will resume the fall from 158.86 to 139.57 support.

In the bigger picture, price actions from 161.94 are seen as a corrective pattern to rise from 102.58 (2021 low), with fall from 158.86 as the third leg. Strong support should be seen from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound. However, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.

Daily Pivots: (S1) 1.2969; (P) 1.2990; (R1) 1.3025; More...

Intraday bias in GBP/USD is turned neutral again with current retreat. On the downside, firm break of 1.2910 support should confirm short term topping, on bearish divergence condition in 4H MACD. In this case, intraday bias will be back on the downside for near term channel support (now at 1.2770). On the upside, though, above 1.3013 will resume the rally from 1.2099 towards 1.3433 high.

In the bigger picture, up trend from 1.3051 (2022 low) is not completed. Resumption is expected after corrective pattern from 1.3433 completes. Next target will be 1.4248 key resistance. This will now remain the favored case as long as 1.2099 support holds.

Sterling is trading slightly firmer today, though it struggles against the rebounding Dollar and Yen. BoE's rate decision leaned slightly more hawkish than expected, with only one member of the MPC, the known dove Swati Dhingra, voting for a rate cut. The rest supported keeping rates on hold. The overall tone of the statement remained unchanged, reinforcing a gradual and cautious approach to monetary easing. While BoE acknowledged downside risks to growth, it sounded alert on inflation persistence, signaling that the central bank is unlikely to rush into aggressive rate cuts.

Meanwhile, Swiss Franc weakened after the SNB cut rates by 25bps to 0.25%. The message wasn’t particularly dovish. The central bank still see inflation rising back to 0.8% in 2026. Given that interest rates are already at an ultra-low level, if incoming data aligns with this forecast, further rate cuts may not be necessary anytime soon. This outlook helped cushion Franc’s downside but was not enough to prevent weakness against stronger currencies like Yen and Dollar.

In the broader forex markets, Dollar and Yen are leading the charge today, though their rebounds remain relatively unconvincing. Both currencies have struggled to sustain momentum so far despite benefiting mildly from renewed risk aversion in global markets. Meanwhile, Kiwi and Aussie are under pressure, appearing to be weighed down by dampened sentiment. Loonie and European majors are stuck in the middle of the pack.

Technically, Gold is struggling to extend gains, as it loses momentum near key resistance levels. It has so far failed to decisively break above the 61.8% projection of 2584.24 to 2956.09 from 2832.41 at 3062.21, a level that coincides with a medium-term rising channel resistance. A break below 3022.66 support would indicate short-term topping, potentially leading to a deeper pullback toward the 55 4H EMA (now at 2983.99) or even further into the 2832.41/2956.09 support zone.

In Europe, at the time of writing, FTSE is down -0.07%. DAX is down -1.40%. CAC is down -0.96%. UK 10-year yield is down -0.045 at 4.597. Germany 10-year yield is down -0.043 at 2.764. Earlier in Asia, Japan was on holiday. Hong Kong HSI fell -2.23%. China Shanghai SSE fell -0.51%. Singapore Strait Times rose 0.57%.

US initial jobless claims rise to 223k vs exp 222k

US initial jobless claims rose 2k to 223k in the week ending March 15, slightly above expectation of 222k. Four-week moving average of initial claims rose 750 to 227k.

Continuing claims rose 33k to 1892k in the week ending March 18. Four-week moving average of continuing claims rose 6k to 1876k.

BoE holds rates at 4.50%, Dhingra lone dissenter for a cut

BoE left the benchmark Bank Rate unchanged at 4.50%, in line with market expectations. Known dove Swati Dhingra once again dissenting, and voted in favor of a 25bps rate cut. However, Catherine Mann, who had previously voted for a 50bps cut, switched her stance and supported keeping rates on hold.

The accompanying statement emphasized a "gradual and careful approach" to rate cuts, reinforcing that BoE is not in a rush to ease policy despite some signs of economic softness.

BoE also highlighted growing global uncertainties, particularly surrounding intensified trade policy risks and geopolitical tensions. The committee acknowledged the impact of new US tariffs and retaliatory measures from some governments. Additionally, recent German fiscal reforms were noted.

While UK GDP growth has been "slightly stronger than expected", business surveys continue to point to underlying weakness in employment intentions and broader economic activity. BoE expects CPI to rise to around 3.75% in Q3 2025, and to "fall back thereafter". But policymakers remain cautious about potential persistent inflationary pressures.

UK payrolled employment rises 21k in Feb, unemployment rate unchanged at 4.4% in Jan

In February, UK payrolled employment rose by 21k (0.1% mom). However, median monthly pay growth slowed to 5.0% yoy from 6.0%, reinforcing signs that wage pressures are gradually easing. However claimant count, surged 44.2k, far exceeding expectations of 7.9k.

In the three months to January, unemployment rate remained unchanged at 4.4%, slightly better than the expected 4.5%. Average earnings including bonuses rose by 5.8% yoy, just below expectations of 5.9%. Excluding bonuses, wages rose 5.9% yoy, in line with forecasts.

SNB cuts 25bps, flags downside inflation risks and uncertain growth outlook

SNB delivered a widely expected 25bps rate cut, bringing the policy rate down to 0.25%. In its statement, SNB justified the decision by pointing to low inflationary pressures and "heightened downside risks to inflation".

The central bank acknowledged that Switzerland’s economic outlook has become "considerably more uncertain", particularly due to rising global trade tensions and geopolitical risks. The external environment remains a key threat to growth.

The new conditional inflation forecast suggests that inflation will remain well within its price stability range, averaging 0.4% in 2025, and 0.8% in both 2026 and 2027. These projections assume that the policy rate stays at 0.25% throughout the forecast horizon.

On the growth front, SNB expects GDP to expand between 1% and 1.5% in 2025, with domestic demand benefiting from rising real wages and easier monetary conditions. However, weak external demand is expected to act as a drag on growth. For 2026, SNB anticipates GDP growth of around 1.5%.

ECB's Lagarde warns US-EU tariff war could slash eurozone growth by 0.5%

Speaking to a European Parliament committe, ECB President Christine Lagarde warned that US tariffs of 25% on European imports could have a significant negative impact on the Eurozone economy, cutting growth by around 0.3% in the first year.

If the EU responds with retaliatory tariffs, the impact could deepen, reducing Eurozone GDP growth by as much as 0.5%.

While the sharpest impact would be felt in the first year, Lagarde emphasized that the effects would be long-lasting, leaving a "persistent negative effect on the level of output".

Beyond growth concerns, inflation outlook would also become highly uncertain in such a scenario.

In the short term, EU retaliatory measures and a weaker Euro—stemming from lower US demand for European products—could push inflation higher by around 0.5%.

In the medium term, weaker economic activity would dampen price pressures, ultimately counteracting the initial inflationary impact.

New Zealand GDP exits recession with stronger-than-expected 0.7% qoq growth in Q4

New Zealand’s economy expanded by 0.7% qoq in Q4, surpassing expectations of 0.4% qoq and officially pulling the country out of recession. However, the broader picture remains mixed, as GDP still declined by -0.5% yoy, reflecting the lingering impact of previous contractions.

The positive quarterly growth was driven by expansions in 11 out of 16 industries, with the rental, hiring, and real estate sector, retail trade, and healthcare services leading the gains.

Despite the overall improvement, some key sectors struggled, with construction and information media & telecommunications posting declines.

Still, a major positive takeaway from the report is that GDP per capita rose by 0.4% in Q4, marking its first increase in two years.

Australian employment plunges -52.8k in Feb, unemployment rate unchanged at 4.1%

Australia’s employment dropped sharply by -52.8k in February, significantly missing market expectations of 30k gain. The decline was broad-based, with full-time jobs falling by -35.7k and part-time employment down by -17k.

Unemployment rate remained steady at 4.1%, in line with forecasts. The participation rate declined by -0.4% to 66.8%, suggesting that fewer people were actively seeking work, which helped keep the jobless rate from rising. Additionally, monthly hours worked fell by -0.4% mom, reflecting softer labor market conditions.

The Australian Bureau of Statistics attributed part of the decline in employment to fewer older workers re-entering the labor force. However, the broader trend still points to resilience in the job market, with employment up by 266k people, or 1.9%, compared to last year. The annual employment growth rate remains close to the 20-year pre-pandemic average of 2.0%.

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.2969; (P) 1.2990; (R1) 1.3025; More...

Intraday bias in GBP/USD is turned neutral again with current retreat. On the downside, firm break of 1.2910 support should confirm short term topping, on bearish divergence condition in 4H MACD. In this case, intraday bias will be back on the downside for near term channel support (now at 1.2770). On the upside, though, above 1.3013 will resume the rally from 1.2099 towards 1.3433 high.

In the bigger picture, up trend from 1.3051 (2022 low) is not completed. Resumption is expected after corrective pattern from 1.3433 completes. Next target will be 1.4248 key resistance. This will now remain the favored case as long as 1.2099 support holds.