GBP

Last week sterling had broken higher throughout the course of the trading week, clearing the 1.37 boundary.

The market looks as if it is ready to continue trading upwards after reaching back to monthly highs, as mixed data coming out from the US economy undermine speculation for a shift in Federal Reserve policy.

The update to the UK CPI could reinforce the Bank of England’s hawkish outlook. The headline reading for inflation is predicted to hold steady at 3.2% per annum for September. However a lowering in the core reading could drag on the pound as it provides Governor Andrew Bailey a larger scope to retain this course for monetary policy.

One focus for markets at the moment is the intention of the BoE to raise interest rates again by as early as December or early 2022. This tends to boost the price of finance throughout the economy and will increase the yield paid on UK’s monetary assets.

EUR

GBP/EUR reached new 2021 highs on Friday, a level which has not been seen since last February before the market took a bit hit due to the pandemic. Sterling also managed to hold throughout the day to close at above 1.18.

Key announcements

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