There is a tug of war situation among the central banks to hike interest rates. What is the bad and the good that will come out from this?

i. Last week of October, European Central Bank officials announced another massive 75 basis point hike, increasing interest rates at the fastest pace in the history of the euro currency.
ii. This week, the Federal Reserve is expected to increase rates by 75 basis points for the fourth time in a row.
iii. The Bank of England could join the club on Thursday.

Content:
. The Interest Rate race has just started, why?
. The impact on different currencies
. It may not be all bad news, why?

With higher interest rates, it attracts investors to buy its currency, in this case the USD.
Currency is always a pair, when USD strengthens, the other side weakens.
When a currency gets weaker, it is very bad news for inflation because they will have to pay more on their imports.
Therefore in order to counter inflation, one of the best measures is to hike rate

Expect more volatility in the currencies market, meaning currencies will take its turn to move.
And if you are a trader, you should welcome volatility. Because with volatility, there are opportunities.

GBP Futures

0.0001 = $6.25
0.001 = $62.50
0.01 = $625
0.1 = $6,250

1.1000 to 1.2000 = $6,250

Disclaimer:
• What presented here is not a recommendation, please consult your licensed broker.
• Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises.


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