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1st November - Weekly FX Update

Top Currency Pairs Monday 1st November 9:00 UTC GBP/USD: 1.36631 (Last week: 1.37769) EUR/USD: 1.15724 (Last week: 1.16516) GBP/EUR: 1.18066 (Last week: 1.18240)

Market News

Pound Sterling The GBP/EUR once again reached yearly highs last week at 1.1899 until a midweek combination of Rishi Sunak's budget release and European figures were announced. The Pound was slightly lower as traders became concerned that Sunak went too far with spending, while he also failed to address labour shortages and inflation. The economic calendar is extremely light ahead of the Bank of England's highly anticipated rate hike meeting this Thursday, amid speculation of an imminent rise in interest rates. The Bank of England are expected to hike rates by 0.15% (ING) with minimal tightening.

Euro German unemployment was the highlight last week, as figures came in much better than expected. The number of people out of work decreased almost twice as much as forecasted, as the demand for new staff increased in Europe's largest economy. Germany's inflation did creep to 4.5%, its highest figure since 1997, which had no effect on the ECB as they held strong on their interest rate and monetary policy stance, clinging on to the 'transitory' tag on inflation.

U.S. Dollar The Pound's fall against the Dollar on Friday was striking, as it dropped almost a percent in a matter of hours from the 1.38 level. The Federal Reserve are also in the spotlight this week as they are poised to announce the tapering of its $120bn per month bond-purchase programme. Traders are also expecting the Fed to be more aggressive than policymakers are indicating when it comes to interest rates, which is giving the Dollar a nice boost. There will be a raft of data releases from the US economy this week, which most notably includes ISM Manufacturing PMI and the closely watched Nonfarm Payrolls on Friday. Economists are expecting new jobs to surge to 385,000 in October, in comparison from the 194,00 figure last month.

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