13th December - Weekly FX Update

Top Currency Pairs Monday 13th December 9:00 UTC GBP/USD: 1.32250 (Last week: 1.32562) EUR/USD: 1.12741 (Last week: 1.12915) GBP/EUR: 1.17295 (Last week: 1.17400)

Market News

Pound Sterling All eyes this week are on the Bank of England meet this Thursday. Major doubts are being intensified following weak GDP figures on Friday which saw growth by a mere 0.1 percent. The Prime Minister is also facing a party revolt after recent leaks have revealed that the government consistently breached their own Covid regulations last year, whilst introducing new Plan B guidance for the entirety of the UK heading into the new year. Inflationary fears are still looming, but with more more pressing issues at hand, it seems more and more unlikely that a rate hike will occur.

Euro The Euro is down in the early trading this week. Reuters have stated in a recent survey that the ECB will be expected to continue its purchasing of €40bn worth of bonds per month until the end of 2022. This is in stark contrast to the Fed who are looking to speed up tapering already. The ECB will meet in Frankfurt on the 16th December.

U.S. Dollar The US Federal Reserve's policy meeting for December is penciled in this week. Despite the emergence of Omicron and the increasing uncertainty it is producing, the Fed look set to announce the acceleration of its tapering, with a $30bn reduction in January and a further $30bn in February. As a result, this could mean that the Fed's QE programme may cease by the beginning of March, although without the extra tapering it is expected to end before June. This would pave the way for an earlier rate hike, with the Fed already set to make a minimum of two moves in 2022.

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