GBP

Sterling found some support yesterday as the reactions to the UK unemployment data continued.

We saw unemployment rates drop from 4.6% to 4.5%, meaning the figure is now at its lowest point in a year. Warnings also suggest caution should be applied to these figures as the numbers are still being affected by factors such as a reduction in low paid jobs created by the pandemic and pushed up average earnings. We also saw job vacancies in this country hit a record figure of just over 1.1 million.

Both Barclays and HSBC yesterday warned of potential downside risks for sterling associated with upcoming key Brexit policy talks and the expected interest rate rise from the Bank of England.

The UK and EU once again can’t seem to agree on the Northern Ireland protocol. Failure to come to an agreement in the near future could result in the UK triggering Article 16 and abandoning part of the Brexit agreement that took so long to achieve. Should Article 16 be triggered this will likely result in further trade disruptions.

USD

The dollar continues to trend downwards against most other major currencies as a result of a slow week for data, following on from the disappointing Non-Farm payrolls release at the end of last week.

The Federal Reserve was expected to announce tapering of bond-buying purchases at its next November meeting, and potentially give signals as to when an interest rate rise will happen. However the extremely poor reading makes this less likely now.

Key announcements

12.30 – US CPI data
18.00 – US FOMC minutes release