IFX Market Report: Friday 8th October 2021

The Euro suffered on Thursday following the release of the ECB’s latest minutes of its September meeting. European central bankers discussed a new bond buying programme that could start next year and concerns about inflation were highlighted. The minutes indicated that there is growing tension among ECB rate-setters over how long the “price surge” is likely to last, as inflation continues to rise over its highest level for more than a decade. Despite last month the ECB forecasting that inflation “would fall from an annualised rate of 2.2% this year to 1.7%” in 2022, the central bank has “consistently underestimated how soaring energy prices and supply bottlenecks would drive inflation above its 2% target this year”. If the Eurozone’s inflation troubles persist, it will likely force more downside pressures on the Euro, causing the currency to fall against its peers.

EURUSD only made a subtle loss in Thursday’s session. The pair opened the day at 1.1567 and closed at 1.1560.

GBPEUR in contrast made decent gains as Sterling capitalized on a weaker Euro. The pair started the day at 1.1760 and pushed towards the 1.18 handle, but sadly closed just below that mark at 1.1792.

As for Brexit, disputes between the British and French over fishing right appears to have worsened. French MP Jean-Pierre Pont has said that the French government should consider “revoking” the Touquet Treaty, which allows the UK to set up border checkpoints in France. Following a summit with French sea and European ministers, Mr Pont said that French fishermen “are all furious and prepared to do everything to get the Brexit accords respected”. He added: “when there are agreements, one must respect them all. We would be happy to continue with Le Touquet as long as the UK respects the Brexit deals and gives what it has promised”.

Cable reversed its downside fortunes on Thursday as the pair made minor gains in the session. GBPUSD opened at 1.3603 and closed at 1.3632.

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