• Audere Research

Weekly FX Outlook November 9th



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GB Pound

Sterling had a volatile week.

Movements

GBPUSD started the week at 1.2858 and traded up to 1.3140 on Tuesday before abruptly falling on Wednesday to near the 1.29 level. It then resumed the upward movement to close the week with a strong gain of 2.5% at 1.3179 (2-month high).

GBPEUR opened at 1.1054 and traded all week in a narrow range (1.1030-1.1170) to close little changed at 1.1080 (+0.24%).

Movement rationale

Some more positive Brexit headlines provided some support but with “significant differences” still in place, particularly around the “level playing field” and fishing, the currency appreciation was limited. GBP/USD reached a 2-months high among USD weaknesses while vs. the EUR the currency is consolidating around the 1.10 level. On Thursday, coordinated stimulus measures by the BOE (further extension of QE) and Government (extending furlough until March) were announced to support UK economy.

Week ahead

GBP is expected to be driven by any progress in Brexit negotiation, with the following events having the potential to influence the markets:

Calendar

Tuesday 8am | ILO Unemployment Rate (Sep)

Thursday 8am | Gross Domestic Product (Q3), Industrial Production (Sep)


US Dollar

The US Dollar fell sharply.

Movements

EURUSD moved steadily upward last week, opening at 1.1632 and pushing higher (particularly during the second half of the week), hitting a 2-month high and closing with a gain of 2.25% at 1.1894.

GBPUSD started the week at 1.2858 and traded up to 1.3140 on Tuesday before abruptly falling on Wednesday to near the 1.29 level. It then resumed the upward movement to close the week with a strong gain of 2.5% at 1.3179 (2-month high).

Movement rationale

The Dollar was primarily driven by the US Election, with the greenback initially weakening on expectations of a comfortable win for Joe Biden that would lead to greater government spending to offset the economic impact caused by the pandemic. Once preliminary election results started to show a closer contest, with Trump winning key states such as Florida, Texas and Ohio, the USD sharply rose by more than 1% versus its peers. It then resumed the downward movement after Biden took the lead in some key battlegrounds and was declared President-elect on Saturday. On the economic front the Federal Reserve left rates and asset purchases unchanged while a stronger than expected US Labour report pushed down the unemployment rate to 6.9%.

Week ahead

USD is expected to have another volatile week ahead, with the currency still vulnerable to significant movements on the back of US Election results:

Calendar

Thursday 2:30pm | Consumer Price Index (Oct), Initial Jobless Claims (Nov 6)

Friday 4pm | Michigan Consumer Sentiment Index (Nov)


Euro

The Euro had a relatively volatile week.

Movements

EURUSD moved steadily upwards last week, opening at 1.1632 and pushing higher (particularly during the second half of the week), hitting a 2-month high and closing with a gain of 2.25% at 1.1894.

GBPEUR opened at 1.1054 and traded all week in a narrow range (1.1030-1.1170) to close little changed at 1.1080 (+0.24%).

Movement rationale

EUR was supported by an overall risk-on environment in the financial market as investors have been betting on a Democratic win that would reverse some of Trump’s controversial policies. However, the single currency could not fully take advantage of the positive risk sentiment as concerns over rising Covid cases and tighter restrictions weigh on the price.

Week ahead

The Eurozone economic data calendar includes the following:

Calendar

Tuesday 11am | ZEW Survey – Economic Sentiment (Nov)

Thursday 11am | Industrial Production (Sep)

Friday 11am | Gross Domestic Product (Q3)


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