Markets calm as Merkel steps down
Wednesday 8 December, 2021
Daily Currency UpdateIt's been a quiet week so far in the foreign exchange world with little movement of major currency pairs as markets await concrete news regarding the potential impact of Omicron. There has also been a lack of top tier economic data. From the UK, COVID-19 cases are drifting higher, however the vaccination campaign seems to be keeping hospitalisations and deaths at a much lower level compared to the start of the year. As mentioned the protection offered by the current range of vaccines to Omicron will likely be crucial to sterling's performance over winter, as will likely be the Bank of England's interest rate decision next week. Recent comments by Deputy Governor Ben Broadbent raised the prospect that we could see a hike in rates to combat the current above target level of inflation. Its another quiet day from the UK, so Omicron developments and the fallout from the Downing Street Christmas party will likely dominate the headlines. GBP/USD trades at 1.3240 with GBP/EUR at 1.1735
Key MoversYesterday saw the German ZEW Economic Survey slip to 29.9 as the mood in Germany continues to sour as the country is gripped by a fourth wave of Covid-19. The latest data saw close to 70k new infections and the highest number of deaths since February, a far from ideal situation for incoming Chancellor Olaf Sholz to inherit as he takes over after Angela Merkel's 16 years in charge of the eurozone's largest economy. US President Biden and Russian President Vladimir Putin held talks via secure video link yesterday in an effort to diffuse tensions as up to 90k Russian troops are reported to have been positioned on the eastern border of Ukraine. There are reports that Russia could be cut off from the global SWIFT payments network should an invasion take place in the spring as some suggest could happen. Stock markets are relatively calm today ahead of another quiet day as investors look ahead to this week's key data, US CPI which is due on Friday. EUR/USD trades at 1.1280.
- GBP/USD: 1.3190 - 1.3300 ▲
- GBP/EUR: 1.1680 - 1.1780 ▲
- GBP/AUD: 1.8490 - 1.8640 ▼
- EUR/USD: 1.1240 - 1.1340 ▼