Daily Currency Update

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Sterling slips despite strong jobs data

GBP - British Pound

This morning has seen the latest monthly UK employment data released from the Office of National Statistics, with job vacancies currently at their highest level since records began back in 2001. The level of unemployment was shown to be 4.5%, however the data is likely to be somewhat skewed as it is the last report that factors in the UK Government's furlough scheme which came to an end last month. There were a similar number of people on furlough when it came to an end as there are currently vacancies, so in theory there are plenty of jobs for those who don’t return to their previous employers. However it could provide some choppiness in the market over the coming months.

Rising energy costs, continuing supply chain problems, and the omnipresent backdrop of COVID-19 mean there will be plenty to give investors jitters as we head into winter. Indeed, even the prospect of higher rates from the Bank of England, possibly as soon as November 4th, has done little to push the pound higher as markets debate whether this enforced action could damage the UK economy at a time when it is being enveloped in more and more uncertainty. GBP/USD is back under 1.36 and GBP/EUR has dropped to 1.1760.

Key Movers

Yesterday was a relatively quiet day in financial markets with the US and Canada enjoying a long weekend due the Columbus Day and Thanksgiving Day holidays respectively. There are several pieces of medium impact data due later with the German ZEW Economic Sentiment survey release at 10am, the most important from the Eurozone. The closely followed report is expected to fall from 26.5 to 23.7 as higher energy costs and a broader based pickup in inflation are predicted to hit sentiment. Should there be an upside surprise to the survey then it could support the shared currency however it is currently still close to its lowest level versus the US dollar since July 2020, so a big miss could see EUR/USD fall back towards the 1.15 level.

From the States speeches from members of the Federal Open Market Committee are awaited with most focus likely to be drawn to one by Fed Vice-Chairman Richard Clarida, scheduled for 4:15pm. Clarida is due to talk about the economic outlook and monetary policy at an online event hosted by the Institute of International Finance and as usual any clues on when the Fed will start to taper its current bond buying programme will likely be keenly awaited. High impact data starts with tomorrow lunchtime’s US Consumer Price Index reading for September. EUR/USD currently trades at 1.1555

Expected Ranges

GBP/USD: 1.3540 - 1.3650 ▼

GBP/EUR: 1.1720 - 1.1810 ▼

GBP/AUD: 1.8380 - 1.8560 ▼

GBP/NZD: 1.9470 - 1.9650 ▼

GBP/CAD: 1.6880 - 1.7050 ▼