GBP gets an early morning push again
Daily Currency Update
GBP - British Pound
Early this morning, we saw another better than expected posting of UK data, with the release of retail sales. The reading beat expectations, coming in at 0.8% in October versus a forecast of 0.5%, the first monthly rise since April.
Consumer sentiment also improved in November, having declined in the previous three months. All in all, the UK economy appears to be robust, and these latest releases support the UK labour market data which has also struck a positive note recently. This lends a hand to the theory that the Bank of England has all its required cards to start looking to tighten monetary policy and hike its interest rates.
All eyes are on December's Bank of England meeting, where there is expectation that the Bank of England may reverse its emergency cut during the height of the pandemic and raise rates by 0.15%. Sterling has been supported by all of this and sits at 2021 highs against the euro.
Key Movers
The euro has retraced some of its heavy losses earlier in the week to remain steady yesterday. This appears to be purely on the back of profit taking after what has been a poor recent period for the euro. With other central banks looking to tighten monetary policy in various guises shortly, the market perceives the European Central Bank is playing catch up, and with the central bank continuing on its rhetoric that it is not ready to do anything just yet, the euro is very much on the back foot and may continue to be into the end of the year.Today is quiet from a data perspective, but we have a number of speakers from all three central banks speaking, including Christine Lagarde from the European Central Bank. Her comments will likely be watched closely for signs of a change in stance, and whether the ECB may now be forced to look at raising rates. With COVID-19 cases on the rise across Europe and threats of lockdowns in places like Germany, the ECB may find it tough to start tightening monetary policy just yet.
Expected Ranges
- GBP/USD: 1.3390 - 1.3465 ▼
- GBP/EUR: 1.1830 - 1.1925 ▼
- GBP/AUD: 1.8425 - 1.8660 ▲
- EUR/USD: 1.1270 - 1.1355 ▼