IFX Market Report: Monday 22nd November 2021

Strong data on Friday enabled Sterling to maintain momentum in the session, marking gains against both the Dollar and Euro by the close of the week. Firstly, the Gfk Consumer Confidence Index rose for the first time in four months, printing a final figure of -14. Gfk noted that while “views on the economy had improved despite rising inflation and the prospect of higher interest rates”, British consumers are now “less buoyant about their personal finances”. Then at 07:00, UK October Retail Sales YoY beat forecasts by 0.7% by coming in at -1.3%. Forecasted at -3.1%, Retail Sales excluding Fuel gave a final reading of -1.9%. Latest data from the Office for National Statistics also shows that October sales are up in both stores and online by 0.8%. This is up from the month before and is “5.8% ahead of pre-pandemic levels in February 2020”.

Cable surpassed the 1.3450 mark on Friday but was unable to test 1.35. GBPUSD opened the session at 1.3447 and closed at 1.3474.

GBPEUR also gained some upside on Friday. Starting the day at 1.1876, the pair was able to go beyond 1.18, finishing the day at 1.1904.

EURUSD traded in a tight range on Friday after a week of heightened volatility. The pair opened at 1.1322 and closed not far off at 1.1317.

It is highly likely the Euro will come under further pressure this week. The two main contributors to the Euro’s recent downfall are the ECB and COVID-19. Despite inflation being over double the ECB’s target at 4.2%, the central bank “will not be hiking rates this year”. Lastly, the spread of COVID-19 in Europe is now at “very” worrying levels according to the World Health Organization. WHO Regional Director Dr Hans Klunge has warned that unless urgent action is taken to stop the spread, over 500,000 lives may be at risk.

On the data front, it’s a quite schedule today. At 13:30 the US will release Octobers Chicago Fed National Activity Index, followed by Existing Home Sales MoM at 15:00. Also at 15:00, the Eurozone will print November’s Flash Consumer Confidence, forecasted at -5.5.

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