Sam Haidar, a strategic market advisor at One Royal Company, said that inflation levels in Britain are still high, and therefore there is a possibility for the Bank of England to raise interest rates further, while the markets are currently looking forward to the next steps.
In an interview with Al-Arabiya, he stated that the data issued by Germany and the “IFO” index indicate a significant deterioration in the manufacturing sector, which increases the possibility of an economic recession in the euro area, and then the markets expect that the US economy will be stronger, and this supports the position of the dollar, regardless of whether Central banks will continue to raise interest or not.
The “Ifo” index fell in May from 93.4 in German April, which measures the business climate, to 91.7 points, the first decline after a rise that lasted 6 months.
Haidar said that the German economy is in a somewhat critical situation, because the services sector is improving, putting pressure on prices, and producing inflation, and after 7 months of improvement in the economy, a significant deterioration has begun in the industrial sector, and then the German economy is heading towards stagnation due to its heavy dependence on manufacturing.
He added that the possibility of an economic recession in the euro area has become great, and thus inflation will rise to high levels, and the European Central Bank will have a difficult position when deciding the interest rate in the coming months.
He expected central banks to fix interest rates during the coming period to review the data, and this strengthens the US dollar.