GBP

Sterling traded close to twenty month highs against the euro, but lost ground against the dollar yesterday as a variety of uncertainties in the UK forced investors to the safety of the dollar.

One potential cause for sterling failing at a key level against the dollar may be owed to renewed concerns regarding the increase in Covid infections in the UK. According to the data released by the UK government, Covid infections surpassed the 50,000 mark for the first time since July with health officials now calling for the reintroduction of lockdown measures ahead of the winter.

Consumer confidence also dropped for a third month in a row to its lowest level since February. GfK’s Consumer Confidence index fell four points to -17 from -13 the month previous as increased inflation and the prospects of higher interest rates weighed on the mind of consumers.

This morning saw the release of UK Retail Sales figures which unexpectedly missed expectations. According to the data released by the Office for National Statistics the month-on-month figures contracted by -0.2% against expectations of 0.5% growth, and the year-on-year figure showed a -1.3% contraction against expectations of a -0.2% contraction.

USD

The dollar strengthened on Thursday as global risk appetite weakened amid ongoing concerns related to global inflation and rising Covid cases.

Another contributor for dollar strength was the Initial Jobless Claims data release which showed less people claimed for state unemployment insurance than economists had forecasted with 290,000 claims against 293,000 forecasted.

Key announcements

07:00 – UK – Retail sales (MoM) missed expectations to read -0.2%
07:00 – UK Retail Sales (YoY) missed expectations to read -1.3%
08:30 – EUR – GER Markit Manufacturing PMI (Oct) expected 56.5
08:30 – EUR- GER Markit Manufacturing Composite expected 54
09:00 – EUR – Markit PMI Composite expected 55.2
09:30 – GBP – Markit Services PMI (Oct) 54.5
16:00 – USD – Fed Chair Powell’s Speech