The USD gains as unrest in China continues
Tuesday 29 November, 2022
Daily Currency UpdateIt’s been a quiet start to the week for the pound with the only domestic data of note a pretty gloomy CBI Realised Sales survey released yesterday which came in at -19 when a reading of 2 was predicted. Anything below zero indicates sales are falling for the businesses that take part. The survey which included 156 companies of which 65 were retailers adds weight to the argument that the UK is already in recession and there is more pain to come for the UK economy as we head into winter. Today’s main event is a meeting of the Lords Economic Affairs Committee with Bank of England Governor Andrew Bailey due to appear before the panel and answer questions on the Banks economic policy and its predicted outlook for the UK. GBP/USD briefly dipped under 1.20 during Asia's trading session but has managed to get back above the psychological level with it currently at 1.2020. GBP/EUR is currently just under 1.16.
Key MoversProtests continue against China's zero-Covid policy in various cities across the country with members of the public calling for an end to the draconian measures the government has implemented to contain the spread of the Omicron variant. China is pushing ahead with a policy of mass lockdowns when outbreaks appear. It doesn't look like President Xi Jinping is going to change tack anytime soon however some easing of measures announced would be a boost to the local economy, global equity markets, and also the euro whose exports to China have been hit by its economic slowdown. Away from China, European Central Bank president Christine Lagarde indicated that she was in favor of another 75bp hike at the bank’s next policy meeting next month. In testimony before the Economic and Monetary Affairs Committee in Brussels Lagarde said the ECB "still has a way to go" to tame inflation which currently stands at 10.6%. Tomorrow sees the latest reading of CPI for the eurozone with a slight fall to 10.4% the median expectation. In contrast, recent comments from US Federal Reserve policymakers indicate they may be opting for a 50bp hike at its December meeting. This month further than expected fall in US CPI saw the dollar drop across the board and the euro has managed to get above parity as a result. EUR/USD is at 1.0365 ahead of another quiet day from the eurozone and the States.
- GBP/USD: 1.1940 - 1.2100 ▼
- GBP/EUR: 1.1530 - 1.1645 ▼
- GBP/AUD: 1.7800 - 1.8000 ▼
- EUR/USD: 1.0320 - 1.0480 ▼