IFX Market Report: Friday 12th November 2021

The Pound suffered a sharp decline on Thursday morning as a direct result of poor UK GDP data. Cable suffered the most as the pair dropped to its lowest levels since December 2020. September’s 3-Month Average GDP came out at a disappointing 1.3%, despite being forecasted at 1.5%. The YoY figure missed expectations by 0.1%, printing a final figure of 5.3%; and Q3 preliminary GDP Growth Rate figures also missed forecasts by 0.2%, coming in at 6.6%. Reports suggest that “supply issues” were one of the main contributing factors to the UK’s lack of expansion. Yesterday’s release also showed that Britain is “2.1% smaller than at the end of 2019”.

GBPUSD started Thursday trading at 1.3390 and depreciated massively. Cable finally ended the session at 1.3382.

The Dollar was able to maintain its new-found strength off the back of high inflation numbers on Wednesday. With CPI at its highest for 30 years the market has inevitably boosted its expectations that Powell and the Federal Reserve will “tighten monetary policy sooner than most other major central banks”. On Wednesday St Louis Fed President James Bullard said that he’s expecting the US Central Bank to hike its benchmark rate twice in 2022 – after it’s finished with winding down its bond-buying program. If chances that the Fed will hike rates first increases, it’s more than likely the Dollar will see further gains.

EURUSD fell further yesterday as the Dollar strengthened. The pair started at 1.1470 and closed at 1.1465

On the data front, the markets focus will be November’s preliminary Michigan Consumer Sentiment, forecasted at 72.4. Also today, at 10:00 Eurozone Industrial Production is expected at 4.1%. Then at 14:00 the Bank of England’s Haskel will be speaking, followed by the Fed’s Williams at 17:10.

GBPEUR traded in a tight range on Thursday. The pair opened at 1.1674 and closed not far off at 1.1673.

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