Sterling was boosted on Monday morning following comments from the Bank of England’s Ben Broadbent. The BoE Deputy Governor “warned that Britain’s tight labour market will add pressure on inflation, reigniting some hopes for an interest rate hike”. Broadbent went on to add that inflation will likely “comfortably exceed” 5% in April next year and that “transitory inflation should be understood as referring to the next 18-24 months”. With the Omicron COVID-19 variant bringing a new level of uncertainty, markets “now expect the BoE to keep interest rates unchanged at its Dec. 16 policy meeting”. On Friday BoE policy maker Michael Saunders, who voted to hike interest rates in November, said he wanted “more information about the impact of Omicron before deciding how to vote this month”. While Sterling was able to capitalize against both the Dollar and Euro in the morning, in the afternoon the currency struggled to maintain those gains.
After opening the week at 1.3254, GBPUSD recorded a minor loss by the end of session, closing finally at 1.3252.
GBPEUR in contrast finished above where it started. The pair opened at 1.1737 and closed at 1.1746.
EURUSD made a loss on Monday. The pair started the session at 1.1292 and closed at 1.1282.
On the data front, all eyes will be on Europe today. At 10:00 the Eurozone will release its Q3 Estimate GDP Growth Rate. The QoQ figure is expected at 2.2% and the YoY number is forecasted at 3.7%. Also at 10:00, Germany releases its latest ZEW Economic Sentiment Index, forecasted at 25.1. Then in the afternoon, at 13:30 the US will publish October’s Balance of Trade, followed by Consumer Credit Change at 20:00.