GBP/EUR: Monday 9:00 UTC 13th September: 1.17174
Despite Boris Johnson ignoring the discord in his party, the decision to raise National Insurance Tax by 1.25% was made last week. This resulted in some early losses for the Pound, however, GBP/EUR rallied on Thursday as the European Central Bank said they would reduce pandemic stimulus measures, but keep the interest rate at 0%. This came after an increasing recovery for business activity was met with soaring inflation. The bank said it would continue to run the bond purchase programme, but at "a moderately slower pace", with analysts expecting it to be reduced by about €10-€20 billion per month. The governing council warned there was some way to go before the pandemic is overcome. Looking ahead, British Chambers of Commerce expect the UK's economic growth to slowdown as the supply chain crisis and staff shortages begin to take hold. They slashed its forecasted GDP in Q3 from 3.5% to 2.8%, and predict GDP in Q4 will be close to 1.6%.
GBP/USD: Monday 9:00 UTC 13th September: 1.38153
The GBP/USD rate took its cues from UK events last week after a slow start with a US bank holiday on the Monday. Dropping to 1.37329 on Wednesday, news that the British government were preparing to hike taxes to fund social care dampened the Pound's spirits. Boris Johnson ignored the discord in his party, and outlined a new levy that will increase National Insurance rates by 1.25%. Bank of England governor Andrew Bailey reversed these losses on Thursday, when he told lawmakers that economic growth was plateauing and a minimum criteria for tightening policy might have been achieved. This sent the GBP/USD as high as 1.38847 last week. British GDP forecasts are continuing to be slashed by the British Chambers of Commerce as supply chain and staff shortages take hold. ILO Unemployment Rate for both the UK and US will come out on Tuesday.
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