Amidst the last-ditch talks held between the UK and France to resolve the dispute over the fishing licenses and checks, French President Emmanuel Macron, who will meet the UK Prime Minister Johnson at the G20 meeting in Rome on Sunday, said the row was “a test” of the UK’s “credibility”, in a Financial Times (FT) interview.

On the other hand, PM Johnson urged the British fishermen to “be confident about going about their lawful business” as he promised action against any infringements on their right to fish.

Meanwhile, the head of the French ports of Calais and Boulogne, Jean-Marc Puissesseau warned, “It will be a drama, it will be a disaster. It will be chaos in your country because the trucks will not cross, it will be chaos at the ports. It has reached a ridiculous point, I would say.”

FX implications

Amid renewed Brexit concerns and pre-BOE caution trading, a potential recovery in GBP/USD from Friday’s massive sell-off is likely to remain shallow.

The cable tumbled 0.80% on the day to hit two-week lows of 1.3668 last Friday, settling the week at 1.3678. The steep drop could be attributed to the month-end flows into the US dollar, lifting the buck from four-week troughs.

Read: GBP/USD Weekly Forecast: Duo of central banks and Nonfarm Payrolls promise wild action

The US Federal Reserve (Fed) is expected to raise its benchmark interest rates in July 2022 to counter the risks of rising inflationary pressures, Bloomberg reports, citing comments from Goldman Sachs economists led by Jan Hatzius.

Key quotes

“The Fed will raise its benchmark from a range of zero to 0.25% soon after it stops tapering its massive asset-purchase program.”

“A second increase will follow in November 2022 and the central bank will then raise rates two times a year after that.”

“The main reason for their new forecast was they now expect inflation to prove more stubborn than they previously thought.”

“Expect consumer price inflation outside of food and energy costs to still be above 4% when the taper ends.”

“We think this will make a seamless move from tapering to rate hikes the path of least resistance.”

“With inflation far above target and job availability high, officials will likely conclude most of any remaining labor force weakness is structural or voluntary.”

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