Daily Currency Update

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Euro rally continues to march on

GBP - British Pound

By all accounts it was a quiet day for the pound yesterday compared to Monday. However, GBPUSD still managed to swing 50 pips towards lunch before regaining loses in the afternoon. With little in terms of Brexit updates yesterday the pound was left to the devices of other currencies, in particular the US dollar.

The CBI’s latest retail sales report was released in the morning but to little effect for Sterling. Indeed, the retail index numbers fell again having rebounded in September, but unsurprisingly online sales as reported by the surveyors increased at its fastest pace since October 2018 suggesting that there has been a shift in spending patterns in the run up to Christmas. The recent announcement around lockdown measures easing over December will be welcome news for the beleaguered sector.

Chancellor Rishi Sunak will update the country this afternoon regarding his spending review after PMQs. The Chancellor is expected to trim foreign aid spending whilst also increasing funding to help people to get back into work.

Key Movers

The day for the euro looked rather similar to the pound yesterday but the significant difference this morning is that the Euro has managed to kick on from its rebound in the afternoon and is testing the 1.19 level against the US Dollar. We are now not a million miles off the 52 week high for EURUSD which sits just above 1.20 and the Euro has gained 250 pips against the dollar since the start of this month.

The common dominator for both the pound and euro’s performance as of late has been the US dollar and the fact that the largest currency in the world is at the heart of investors’ shift towards risk. As mentioned yesterday news and headlines that President Trump is allowing the transition to begin, alongside the recent vaccine updates has seen US equities sky rocket.

The Dow Jones crossed the 30,000 mark for the first time in its history whilst the risk sensitive currency, the Aussie Dollar also benefited. Even Bitcoin managed to jump in on the action. On the other side of these trades were the US dollar (obviously), the Japanese Yen and gold.

The minutes from the latest Federal Reserve meeting are released late on this evening following the last meeting three weeks ago. It will be interesting to see what the threshold needs to be for the Federal Reserve to ramp up asset purchasing particularly because COVID 19 numbers have increased significantly since the last Fed meeting. Remember as well that it is Thanksgiving this week and liquidity is thinning out so we could see further choppiness overnight.

Expected Ranges

GBP/USD: 1.3280 - 1.3400 ▲

GBP/EUR: 1.1200 - 1.1270 ▲

GBP/AUD: 1.8140 - 1.8220 ▼

EUR/USD: 1.1830 - 1.2000 ▲