IFX Market Report: Thursday 21st October 2021

The US Dollar experienced another aggressive sell-off in Wednesday’s session, marking losses against both the Euro and Sterling. The risk-on market sentiment naturally added more pressure for the Greenback but enabled other currencies to flourish. The Pound was able to rally on Wednesday amid the Office of National Statistics printing lower than expected UK inflation figures. According to the ONS, “Consumer Prices Index (CPI) measure rose by 3.1% in September 2021, slipping back from 3.2% in August”. Their findings say, “increased prices for transport were the main contributor to an overall rise in prices, along with household goods, food and furniture”. The UK printed a Core Inflation Rate of 2.9% and 0.3% MoM. Despite coming in under expectations, “the level remains well above the Bank of England target of 2%. September’s inflation figure is unlikely to have an impact on the BoE’s imminent decision on interest rates, due at the beginning of November, as a pause in the rate moving upwards has been anticipated”.

GBPUSD opened on Wednesday at 1.3774 and quickly gained some upside, surpassing the 1.3800 handle with ease. Cable finally finished the day at 1.3820.

GBPEUR also edged higher yesterday. The pair started the day at 1.1848 and closed over 20 pips above at 1.1869.

The Euro was able to claw back some of its overnight losses against the Dollar in the session. EURUSD opened at 1.1625 and pushed higher to close at 1.1643.

At 13:30 today the US will print its weekly job report. While this data will be closely watched, the release will likely not have the influence it has had in the past as the Fed have already said a slowdown in jobs “should not derail” the Feds “taper timeline”. Following the jobs report, Fed member Waller will be speaking.

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