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22nd November - Weekly FX Update

Top Currency Pairs Monday 22nd November 9:00 UTC GBP/USD: 1.34219 (Last week: 1.34134) EUR/USD: 1.12676 (Last week: 1.14469) GBP/EUR: 1.19120 (Last week: 1.17180)

Market News

Pound Sterling The Pound found strength last week from positive employment figures and higher than expected inflation (4.2% compared to the expected 3.9%). As a result, economists see a December rate hike likely, with traders once again pricing in a rise from 0.1 to 0.25 by the end of 2021. The Pound hit a 20-month high over the Euro due to a combination of this data and rising virus rates in Europe. Looking ahead to this week, economic data is sparse for the UK, and we could see the Pound's recent progress blunted by ongoing Brexit concerns after talks ended in a stalemate on Friday. Talks are set to resume today over the Northern Ireland Protocol as the tense dispute continues.

Euro The Euro is under serious pressure at the moment as Coronavirus cases continue to mount across Eurozone countries. Austria have introduced mandatory vaccinations from February, with Germany set to follow in their footsteps. Protests have also began to turn violent in The Netherlands over the latest set of restrictions were enforced. This has slammed the brakes on Europe's economic recovery, as last week we not only saw a 20-month high for the GBP/EUR exchange rate, but a similar picture with EUR/USD reaching a 17-month low. European economies have also seen a rise in inflation similar to the UK, over double the ECB's target, but unlike the BoE, Christine Lagarde is adamant there will be no rate hikes in 2022, let alone 2021.

U.S. Dollar The Dollar continued to pressure the Euro last week as the EUR/USD exchange rate hit a 17-month low of 1.12554 amid rising Coronavirus cases across Europe. Meanwhile the Pound has held strong against the safe-haven Dollar, opening this week at a similar rate to the last. The US economic calendar is cramped this week with Thanksgiving on Thursday 25th November, this most notably includes GDP. On Wednesday, the FOMC (Federal Open Market Committee) meeting minutes are set to be released, which will detail what was discussed between policymakers at the beginning of November. Investors will be eager for any mention of policy tightening.

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