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All eyes on the US Federal Reserve

Tuesday 14 December, 2021

Daily Currency Update

UK unemployment data released this morning showed that the total number of people claiming benefits related to unemployment fell by 49,800 over November, more than the forecast of 31,500. The UK unemployment rate also fell by a small margin from 4.3% to 4.2%. This data release did not have any meaningful impact on the pound, with GBP/USD holding its position above the 1.32 handle and GBP/EUR also unmoved at around 1.1710. With Omicron fears impacting current market conditions, many feel that the chances of an interest rate hike at the Bank of England’s meeting on Thursday have all but faded. This in turn could be what is weighing heavy on the pound.

Key Movers

We saw the USD climb to one-week highs against a number of its major rivals this morning. The US Federal Reserve meeting which starts today is expected to be dollar positive, which markets may have already priced in. Many expect the Bank to end their bond buying stimulus earlier than initially anticipated with a subsequent interest rate hike early in 2022. The dollar index (DXY) – which measures the value of the USD against a basket of other major currencies – climbed to 96.464, its highest reading in a week. EUR/USD is stable, trading at around 1.1285. We could see some volatility later in the day however once the Federal Reserve meeting kicks off.

Expected Ranges

  • GBP/USD: 1.3255 - 1.3185 ▼
  • GBP/EUR: 1.1680 - 1.1765 ▲
  • GBP/AUD: 1.8495 - 1.8605 ▲
  • EUR/USD: 1.1310 - 1.1235 ▼