Home Daily Commentaries US dollar gains as China covid worries persist

US dollar gains as China covid worries persist

Tuesday 22 November, 2022

Daily Currency Update

The US dollar rose against the pound and euro on Monday, recouping recent losses, as fresh COVID-19 worries in China fuelled concerns over the global economic outlook and made traders avoid riskier currencies. China warned on Monday that it was facing its most severe test of the COVID-19 pandemic, with a surge in COVID cases sparking fresh restriction measures. Deaths from the virus were also recorded in Beijing for the first time since late May. Speeches delivered by Federal Reserve speakers overnight delivered few surprises, with Cleveland Fed President Loretta Mester saying the central bank can downshift to smaller interest rate hike increments from next month.

Key Movers

In the UK, the government said it has no plans to move to a smoother Swiss-style relationship with the European Union as newspaper reports to that effect drew a sharp reaction from Prime Minister Rishi Sunak’s more eurosceptic lawmakers. Bank of England policymakers last week said Brexit was hurting the UK economy. On Monday, the stronger USD weighed on GBP with the British currency slipping 0.5% and as investors braced for further weakness for the pound ahead of public finances data due out today and flash PMI figures on Wednesday.

Expected Ranges

  • GBP/USD: 1.1805 - 1.1885 ▲
  • GBP/EUR: 1.1505 - 1.1575 ▲
  • EUR/USD: 1.0245 - 1.0305 ▲