Inflation as the main factor affecting the currency markets in 2022

Ebury analysts expect the market optics to focus on inflation and the actions of central banks in 2022.

"We expect the euro and the British pound to outperform the US dollar, despite several interest rate hikes in the US. Most CEE currencies should benefit from better sentiment and higher interest rates," the release reads.

In the first half of 2021, the Covid-19 pandemic continued to drive financial market movements. As predicted by Ebury, a key factor for most currencies was the speed at which vaccines were delivered to nationals of individual countries. In the second half of the year, attention shifted largely from the pandemic back to more conventional topics, namely macroeconomics and monetary policy.

"In recent months, the most important factor influencing financial markets has been the spike in inflation following the release of delayed demand. It has been built up under accommodative monetary and fiscal policies. In addition, higher inflation has been catalyzed by the surge in energy prices and significant supply-side shortages," Ebury said.

(WBJ)