GBP

The pound remained well supported against both the Euro and Dollar on Thursday as strong inflation data and labour market data kept sterling higher across the board. Following economic data releases this week, this is a big indication that the Bank of England could look to raise interest rates as soon as December. Money markets are starting to price in a rate hike for December but analyst have warned that the bank could disappoint which could see sterling weaken.

Furthermore post Brexit tensions has held the pound back in recent weeks as the U.K. and EU fail to resolve their differences over the Northern Ireland Protocol. In turn, should the UK and EU fail to bridge the gap in talks, the UK have threatened to trigger Article 16. Talks seem to be going well with as Irish prime Minster Micheál Martin stated there is a serious intent to get this resolved.

USD

The dollar continued to strengthen this week across the board as investors place bets on interest rates rising a lot quicker than expected. With inflation being at 30 year highs, the market is starting to price in a rate hike from the FED very soon. With economic data being strong in the US, this is the biggest indication that the FED could look to raise rates. Retail sales figures from the US this week also beat market expectations.

Key announcements

7:00 – GBP – Retail sales m/m – Actual 0.8 from previous -0.2%
8:30 – EUR – ECB President Lagarde speaks