IFX Market Report: Monday 17th January 2022

The US Dollar was able to end a three-day losing streak on Friday “as the recent selling spree driven by the view that Federal Reserve tightening moves were largely priced in abated, and as weaker risk appetite in financial markets led investors to shun riskier currencies”. After surpassing the 1.37 handle earlier in the week, a stronger Dollar on Friday forced Cable to slip down in the 1.36 range. The US Dollar Index was up by 0.3% on the day at 95.157.

Sterling was in the red on Friday as “investors assessed the impact of a potential leadership change in the country as Prime Minister Boris Johnson faces the gravest crisis of his premiership after revelations about a series of gatherings in Downing Street during COVID-19 lockdowns”. Anger continued grow within the Conservative Party over the weekend and “an increasing number of MPs” are calling for the Prime Minister to step down. There is a strong possibility that if political uncertainty persists, it will likely have an adverse effect on the Pound.

GBPUSD started Friday trading at 1.3733 and deteriorated as the Greenback grew stronger. Cable finished the week at 1.3674.

GBPEUR saw little activity on Friday – opening at 1.1975 and closing at 1.1973.

EURUSD lost some momentum despite the Euro staying resilient in the session. The pair opened at 1.1467 and closed at 1.1419.

The UK published its final GDP numbers for November on Friday. GDP MoM beat expectations by 0.5% after printing a final figure of 0.9%. Chief Economist at the Office for National Statistics, Grant Fitzner, said “the economy grew strongly in the month before Omicron struck, with architects, retailers, couriers and accountants having a bumper month”. While the data was largely positive, some experts claim that economic growth will have slowed again after the spread of Omicron at the end of 2021.

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