GB Pound
Sterling had a mixed week.
Movements
GBPUSD opened at 1.3461 and after attempting to recover during the first part of the week, reaching a high of 1.3605, it resumed its move lower, hitting a new 11-month low at 1.3354. It finally closed at 1.3414 for a limited weekly loss of 0.35%.
GBPEUR opened at 1.1646 and traded range-bound for most of the week, before eventually moving higher on Friday and ending the week with a gain of 0.6% at 1.1716.
Movement rationale
After the sharp declines endured in the wake of the BoE's November policy decision, Sterling posted a mixed performance last week, advancing against the Euro but losing further ground to the Dollar, falling to a new 11-month low. The Pound got off to a promising start on Monday, attempting to recover against major peers, but failing to maintain its (fragile) momentum, and moving lower in the following trading sessions. Rising UK-EU tensions and a possible deadlock over implementation of Northern Ireland trading agreements added pressure. The Pound remained on the back foot on Thursday, as GDP figures disappointed the market, with the economic growth slowing to 1.3% for the last quarter. The currency eventually found some support on Friday, gaining 0.4% against EUR and USD.
Week ahead
It will be an important week for Sterling, with the UK releasing unemployment data Tuesday, inflation Wednesday, and retail spending on Friday.
Calendar
Tuesday 7am | ILO Unemployment Rate (Sep)
Wednesday 7am | Consumer Price Index (Oct)
Friday 7am | Retail Sales (Oct) , GfK Consumer Confidence (Nov)
US Dollar
The Dollar hit an almost 16-month high versus major peers on strong inflation data.
Movements
EURUSD began at 1.1556 and had a quiet start with limited volatility. It then lost more than 1% on Wednesday and Thursday, to reach a new low since July 2020 at 1.1431. It finally closed with a heavy loss of 0.93% at 1.1448.
GBPUSD opened at 1.3461 and after attempting to recover during the first part of the week, reaching a high of 1.3605, it resumed its move lower, hitting a new 11-month low at 1.3354. It finally closed at 1.3414 for a limited weekly loss of 0.35%.
Movement rationale
The Dollar was relatively quiet at the start of the week, as investors were waiting the release of inflation data on Wednesday. A surprisingly strong figure, with headline CPI surging at the fastest annual pace in three decades (6.2%), pushed the Greenback up by more than 1%, reaching a near 16-month high against peers, the biggest weekly gain since mid-August. The appreciation was driven by market expectations of a monetary tightening at a faster pace than currently signalled by the Fed, a supportive outcome for the Dollar.
Week ahead
The main event on the US economic calendar this week will be Tuesday’s retail sales figures.
Calendar
Tuesday 1:30pm | Retail Sales (Oct)
Thursday 1:30pm | Initial Jobless Claims (Nov 12)
Euro
The Euro was weak.
Movements
EURUSD began at 1.1556 and had a quiet start with limited volatility. It then lost more than 1% on Wednesday and Thursday, to reach a new low since July 2020 at 1.1431. It finally closed with a heavy loss of 0.93% at 1.1448.
GBPEUR opened at 1.1646 and traded range-bound for most of the week, before eventually moving higher on Friday and ending the week with a gain of 0.6% at 1.1716.
Movement rationale
The single currency remained subdued last week, with investors maintaining a relatively bearish outlook based on ECB reluctance to change it dovish monetary stance in the short term, against the backdrop of a fragile economy recovery. Some mixed economic data was released, with the German ZEW Economic Sentiment Index unexpectedly stronger than expected, while month-to-month industrial output fell across the continent in September.
Week ahead
The Eurozone economic calendar includes the following:
Calendar
Tuesday 10am | Gross Domestic Product (Q3)
Thursday 10am | Consumer Price Index (Oct)
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