Pound recovered its losses and returned to last week's highs even though the macroeconomic calendar was empty yesterday and there were no statements from the Bank of England. This is thanks to the European Central Bank, more precisely to its representatives and their statements, which made euro rise and in turn, pulled pound with it. Most interesting were the words of Isabelle Schnabel, who openly said that everyone should get ready for a long period of relatively high interest rates. She repeatedly referred to the development of interest rates before 2008, arguing that the current environment is more difficult so the average interest rate should be higher than it was then. Up to the crisis in 2008, interest rates in Europe had ranged between 2.00% and 4.75% with an average level of around 3.00%. From this, it can be concluded that the imminent increase in rates will not be the last, and that a reduction is out of question at the moment. Schnabel also assured that the ECB has sufficient resources to prevent the banking crisis from spreading.
In short, euro rose and pulled the pound with it, but only the later was able to return to local highs. As for today, given that the macroeconomic calendar is once again, euro is likely to go up, trying to get back to the recent highs. That, in turn, will push pound up slightly.
EUR/USD jumped above 1.0800, indicating an increase in long positions. If buyers manage to keep the quote at this level, there is a high chance that the pair will see further gains.
GBP/USD had been rising since the opening of trading this week. As such, it has recovered its recent losses, and staying above 1.2350 will result in a further increase in the direction of the local high in the medium term.
