Harmovest Capital | Key Insights: Rates on Hold, What’s Next?

Key Highlights

• Bank of England holds rates at 3.75%

• European Central Bank keeps rates unchanged

• Gold finds support amid macro uncertainty

Market Recap

The Bank of England maintained its benchmark rate at 3.75% in an 8–1 vote, in line with expectations. The decision reflects a cautious approach as policymakers assess the impact of ongoing geopolitical tensions on energy prices and inflation. Recent data shows UK CPI rising to 3.3%, with risks of further upside driven by energy costs and potential second-round effects such as wage pressures. The BoE emphasized that while monetary policy cannot directly control energy prices, it will act to ensure inflation returns sustainably to its 2% target.

Similarly, the European Central Bank left its key rates uncnged (Deposit: 2.00%, Main Refi: 2.15%, Marginal Lending: 2.40%). The ECB highlighted rising upside risks to inflation alongside increasing downside risks to growth. Elevated energy prices, driven by geopolitical developments, remain a key concern. However, long-term inflation expectations remain well anchored, and the ECB reaffirmed its data-dependent, meeting-by-meeting policy approach without committing to a fixed rate path.

In the US, economic data continues to show resilience. March personal spending rose 0.9%, supported by a 0.6% increase in income, while real consumption remained positive despite rising inflation. Headline and core PCE increased by 0.7% and 0.3% respectively, indicating persistent price pressures. Q1 GDP came in at 2.0%, slightly below expectations due to a drag from net exports, though strong business investment—particularly in AI-related sectors—continues to support growth. However, a declining savings rate suggests potential pressure on future consumer demand.

Summary

Both the BoE and ECB remain on hold amid heightened uncertainty and rising inflation risks, while the US economy continues to demonstrate resilience. Markets increasingly expect the Federal Reserve to maintain its current policy stance in the near term, providing support to the US dollar.

Focus Today

• US ISM Manufacturing PMI

Market Impact

USD | Gold | US Indices

Strategy

Bullish bias on precious metals

Market Sentiment

The Fear & Greed Index has risen to 67, indicating improving risk appetite as markets gradually digest geopolitical risks.

Technical Analysis (XAUUSD)

Gold remains under short-term pressure, forming a bearish structure after breaking below the 4660 support level. Further downside may test the 4600 area in the near term.