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Markets await US inflation data

Friday 10 December, 2021

Daily Currency Update

The pound has managed to recoup some of the losses seen earlier this week after tighter COVID-19 restrictions were implemented in England to try and slow down the spread of the Omicron variant. GBP/USD slipped briefly to around 1.3160 in the aftermath of the announcement, however has managed to regain to the 1.32 level ahead of another closely watched US inflation number due out at lunchtime. This morning we have seen UK GDP for October miss target showing a sluggish 0.1% growth compared to September. Overall the UK economy is still estimated to be around 0.5% smaller than before the pandemic. GBP/USD sits at around 1.3215 with GBP/EUR at around 1.17.

Key Movers

The main focus for the markets will again be US inflation with the latest figures due to be released at 1:30pm. Last month saw CPI  rise by 6.2% year on year and there are expectations that it could push towards the 7% mark which could heap pressure on the Federal Reserve to withdraw its QE programme at a faster pace to enable it to hike interest rates sometime in the middle of next year. Next week sees the last monetary policy decisions from the Federal Reserve, the European Central Bank and the Bank of England for 2021. It could be a volatile few days with commentary from respective Bank chiefs closely watched, as well as more data regarding Omicron and its potential impact on world health care systems as the northern hemisphere heads into winter. EUR/USD trades at around 1.1290.

Expected Ranges

  • GBP/USD: 1.3160 - 1.3300 ▲
  • GBP/EUR: 1.1640 - 1.1750 ▲
  • GBP/AUD: 1.8390 - 1.8530 ▲
  • EUR/USD: 1.1240 - 1.1360 ▲