ECB & BoE Rate Decisions – Meta Tumbles 20% & Amazon Reports
EUR/GBP => The pair rises after falling for 2-days
Meta => The stock slumps 20% post-results
Amazon => The stock holds above $3000
ECB & BoE to Drive EUR/GBP
EUR/GBP is edging higher on Thursday after two straight days of declines and as central banks come into view, with both the ECCB and the BoE monetary policy announcement. The BoE is expected to raise interest rates for the second meeting in a row. This would be the first back-to-back rate rise in 18 years. In December the BoE raised rates to 0.1% and today expectations are for a 0.25% rate hike to 0.5%. Should the BoE give hawkish guidance the pound could rally higher. Meanwhile, the ECB is not expected to raise interest rates. However, the record-high inflation recorded in January has prompted speculation that the ECB could raise rates by the end of the year. Even a hint of hawkishness could help to drive the euro higher.
| EZ Inflation YoY Jan | Actual 5.1 (0.6%) | Previous: 5% |
What’s next for EUR/GBP?
EUR/GBP trades within a descending channel, more recently it has been trading at the lower band of the channel has failed to break above the 50 sma. Sellers will be looking for a move below 0.8305 to confirm further downside towards 0.8270. On the upside, the 20 sma could offer some resistance ahead of 0.8380 the January 18 high. However, the real test is at the 50sma and January high of 0.8420, with a move above here, which would change the short-term bias to bullish.
Meta Plunges After Disappointing Earnings & Guidance
Shares in Meta, formerly known as Facebook, tumbled 20% after the close, following the release of Q4 earnings. The tech giant reported EPS of $3.67 on revenue of $33.67 billion, up from $28.1 billion in the same period a year earlier. EPS was below the average estimate of $3.85 but revenue best forecasts of $33.4 billion in revenue. The Q1 revenue forecast, however, was more disappointing guided for between $27 – $29 billion, short of the $30.2 billion analysts forecast. Management highlighted the re-opening after the pandemic which meant people were busier as one of the reasons behind the slowdown. They also highlighted a shift towards videos like Reels, which monetize at a slower rate than Feed and Stories. Headwinds from Apple’s iOS privacy change which makes it harder to track ads will cost Meta an estimated $10 billion in 2022. The stock is expected to open at $250, a level last seen in January 2021.
Amazon Q4 Earnings Preview
Amazon is due to report Q4 earnings after the close. Wall Street is expecting the e-commerce giant to report revenue growth of 9.8% year on year taking Q4 revenue to $137.9 billion. This would be the fourth straight quarter of slower growth, hurt by tough comparisons last year when the pandemic was in full swing and when Prime Day was delayed until the final quarter in 2020. In Q4 costs are likely to have risen due to staff shortages, higher wages, and amid supply chain issues, in addition to higher shipping and freight costs. Higher costs mean that operating income could decline to between $0-$3 billion. EPS is forecast at $3.74.
Support can be found at $2893 (January 31 low) and $2714 (January 24 low).
Resistance for the stock can be seen at $3170 (August & Oct low) and $3300 (50sma).
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