IFX Market Report: Monday 25th October 2021

Sterling had a fairly uneventful session on Friday, ending the week only slightly below where it started. The rising number of new COVID-19 cases is proving to be a concern among investors; however, expectations that the Bank of England will hike interest rates before 2022 has capped any significant downside moves for the Pound. Yesterday Britain “reported 39,962 new cases… and 72 new deaths within 28 days of positive test”.

Looking ahead to this week, any further in indication a rate hike imminent Sterling will certainly rise higher. At 15:00 today, the (arguably) most dovish Monetary Policy Committee member Silvana Tenreyro will be speaking. When Tenreyro last spoke only a few weeks ago, she claimed it would be “self-defeating” to raise interest rates in response to what she descried as a temporary rise in inflation. Some experts believe if Tenreyro shows an “openness to acting against inflation”, this could “tilt the scales” in Sterling’s favour, giving it the momentum requires to spike.

GBPUSD opened the session at 1.3775 and depreciated only slightly on the day. Cable finally closed the week at 1.3741.

GBPEUR also fell on Friday. The pair started at 1.1833 and closed the day at 1.1815.

EURUSD dropped only 10 pips on Friday. The pair started the day at 1.1641 and closed at 1.1631.

On the data front, it’s a rather quiet schedule. At 09:00 Germany will be releasing its latest Ifo Business Climate, forecasted at 97.9 with a previous of 98.8. Following this, in the afternoon at 13:30 the US will publish September’s Chicago Fed National Activity Index. Then lastly, the US Monthly Budget Statement will be released.

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