Daily Currency Update

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UK interest rate decision finely balanced

GBP - British Pound

With the week wrapping up it’s difficult not to look ahead towards November and the Bank of England's latest monetary policy decision. This meeting is set to be a 'live' meeting meaning that there will be an interest rate decision happening. Huw Pill, the new Chief Economist of the Bank of England, was speaking yesterday in his first interview of the new job and rather interestingly stated that the decision on November 4th was 'finely balanced'. This is an interesting change from the Bank, who under Mark Carney heavily utilised the use of forward guidance in their decision making. Whilst markets are pricing in an interest rate hike next month, these sort of comments act as a sharp reminder that things can change. If the Bank decide to hold off on raising rates, then this will be a big disappointment for any sterling bulls and could cause the pound to tumble. GBP/USD remains muted for the time.

Key Movers

European flash PMIs are definitely the highlight this morning and the results are mixed with services missing expectations whilst manufacturing beat expectations. The usual rhetoric around supply chain bottlenecks has seen the European recovery falter and the fact that any supply chain issues can cause inflation to skyrocket is a problem for the ECB. EUR/USD has recovered slightly in the last 24 hours but the markets may be quiet ahead of next week’s significant ECB meeting.

Expected Ranges

GBP/USD: 1.3740 - 1.3840 ▲

GBP/EUR: 1.1820 - 1.1870 ▼

GBP/AUD: 1.8330 - 1.8500 ▼

EUR/USD: 1.1580 - 1.1670 ▲