Sterling claws back some of its recent losses
Tuesday 9 November, 2021
Daily Currency Update
GBP - British Pound
The pound had recovered some of its losses it suffered against the US dollar last week when rates dropped to below 1.3500. This saw the pair trade near one-year lows. The recovery seen is mostly driven by US dollar weakness, as the largest currency in the world lost ground against the euro as well as the Japanese yen. Additionally, the US dollar index which measures the currency against a basket of its peers dropped from 94.40 to 93.90 overnight. UK GDP figures are set to be released on Thursday and could act as another anchor for the pound. Following the surprise decision from the Bank of England to keep rates on hold last week, it would appear it is going to be a while before the pound rises back to 1.3900+.
Key MoversFor the US dollar the focus now is on the Federal Reserve members who are out and speaking following last week’s interest rate decision and the blackout period beforehand. Charles Evans, who is an FOMC member and head of Chicago’s Federal Reserve said that inflation is largely ‘temporary’ and will subside once supply side pressure have eased. While vice-chair Richard Clarida said that conditions to raise rates could be met by the end of 2022. Both sets of comments would indicate that the Federal Reserve still isn’t in a big rush to raise interest rates and hence the US dollar weakness yesterday.
Later on this morning we are watching out for the latest German ZEW economic survey. With Germany acting as the backbone of the European economy, this is often a significant monthly report. However, the usual supply side bottlenecks are set to dampen the survey, alongside the current fourth wave of Covid infections throughout the country.
- GBP/USD: 1.3450 - 1.3600 ▲
- GBP/EUR: 1.1640 - 1.1720 ▲
- GBP/AUD: 1.8200 - 1.8290 ▲
- EUR/USD: 1.1550 - 1.1605 ▲