Confused by the inflation news - effect on Forex?

Discussion in 'Forex' started by hanneswas, Oct 20, 2021.

  1. This inflation news is the main reason why GBP/USD has increased so much. The market believes that this will lead to an interest rate hike in the near future, which has a positive impact on the value of GBP/USD.
     
    #41     Dec 1, 2021
  2. cravat

    cravat

    During a high inflation period, the cost of goods increases whereas the value of currency decreases. A depreciating currency never attracts foreign customers disturbing the trade balance in the country. Therefore, high inflation rates means lower interest rates.
     
    #42     Dec 3, 2021
  3. shine

    shine

    The problem is that the price can react differently to any news. For example, there may be positive news, but the price can suddenly go down. Therefore, trading on the news is a game of roulette. Do not rush, the market will not run away from you), wait until the market calms down and the strategy gives you a signal to enter on a calmer market. Then there will be more chances to earn.
     
    #43     Oct 14, 2024
  4. Waylen

    Waylen

    The GBP/USD rise despite higher inflation news could be due to weakening USD rather than strong GBP fundamentals. Market sentiment may have shifted, with traders pricing in expectations of future BoE rate hikes, which can strengthen the GBP. Always consider broader market dynamics and geopolitical factors influencing currency movements.
     
    #44     Oct 14, 2024