Daily Currency Update

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Fresh lows for the pound

GBP - British Pound

The pound continues to remain on the back foot and as mentioned earlier in the week this morning’s GDP figures have acted as an anchor on the currency. There had been a bit of a recovery earlier this week but all gains have now been erased with GBP/USD moving from 1.36+ to below 1.34. Sterling has now hit a new 2021 low. It’s a similar story for GBP/EUR as well but with the narrower range which is as expected. It was a mixed bag this morning in terms of the GDP figures as the UK economy grew 0.6% in September, beating expectations, but July’s number was revised lower. This means for the quarter growth slowed to 1.3%. The UK economy is still 2.1% smaller than at the back end of 2019 and the usual issues are continuing to drag on output – mainly staff shortages and supply chain problems.

Key Movers

Elsewhere, inflation figures were rocketing yesterday. Most notably, America saw inflation figures hit a whopping annual rate of 6.2% which is the highest level in 31 years. China and Germany both saw inflation levels increase as well but the market was focused on what is unfolding in America. These inflation levels pile more pressure onto the Federal Reserve who have long maintained that price increases are ‘transitory’ and will fade in time. The Fed though must have been shocked by yesterday’s release and now the market will be expecting them to tighten their monetary policy at a faster pace than is currently signalled. As a result of this market reaction the US dollar Index, which measures the dollar against a basket of global currencies surged 0.8%. EUR/USD, the largest currency pairing in the world, has seen similar moves as well and is trading around July 2020 lows.

Expected Ranges

GBP/USD: 1.3360 - 1.3480 ▼

GBP/EUR: 1.1660 - 1.1705 ▼

GBP/AUD: 1.8280 - 1.8370 ▲

EUR/USD: 1.1450 - 1.1570 ▼