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European data holds headlines

Daily Currency Update

German inflation slowed more than expected in October as Europe’s biggest economy struggles to grow. Price pressures are the weakest since June 2021 (3%) which supports the European Central Bank's argument that the consecutive interest rate hikes are starting to show their effects. German GDP in the 3rd quarter was also down 0.1% on the previous quarter. Year-on-year data from Spain also showed inflation had fallen from 3.8% predicted to mirror the previous 3.5%. GBP/EUR traded within a tight range through yesterday between 1.1440 and 1.1480, sitting at the lower end of this range this morning. EUR/USD ticked higher, breaking back through 1.0600 and moving towards 1.0650 this morning. GBP/USD sits higher at 1.2160.

Today we anticipate flash CPI data from Europe among other European locations giving their inflation latest – France and Italy. As we enter the afternoon, Canadian GDP month-on-month will be released alongside US employment cost and consumer confidence.

Key Movers

Chinese manufacturing and non-manufacturing both fell, data showed overnight denting hopes of a recovery in the world’s second-largest economy. Manufacturing PMI dipped below the 50-point level which shows contraction and non-manufacturing fell from the previous figure but remained above 50.00. However, data earlier this month showed GDP rose to 4.9%.

Bank of Japan held interest rates but altered the rhetoric around its yield curve control policy. This would see a range of -1 and 1% as a reference cap. Being the first major central bank to announce this week, eyes will now turn to the US decision tomorrow.

Expected Ranges

  • GBP/USD: 1.2120 - 1.2250 ▲
  • GBP/EUR: 1.1430 - 1.1480 ▼
  • GBP/AUD: 1.9050 - 1.9190 ▲
  • EUR/USD: 1.0580 - 1.0680 ▲