The pound traded with considerable volatility last week, briefly striking a new 30-month low against the euro as underwhelming UK data and autumn budget speculation triggered dramatic swings in Sterling.
Last week’s key rate movements
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GBP/EUR – Down 0.3% on the week
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GBP/USD – Unchanged on the week
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EUR/USD – Up 0.4% on the week
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AUD/USD – Up 0.8% on the week
Pound (GBP)
In addition to ongoing budget speculation, the pound (GBP) will also be influenced by the UK’s latest consumer price index this week. If inflation cooled in October, it's likely to cement bets the Bank of England (BoE) will cut interest rates in December and reaffirm the GBP selling bias.
Euro (EUR)
The release of the Eurozone’s latest PMIs will be the primary focus for EUR investors this week. If November’s preliminary figures point to a further acceleration of activity in the bloc’s private sector, the euro (EUR) is likely to rise.
US dollar (USD)
The reopening of the US government is set to open the floodgates for Federal economic data this week, with the release of September’s non-farm payroll figures potentially pulling the US dollar (USD) lower if signs of a cooling labour market trigger a dovish repricing of Federal Reserve interest rate expectations.
Australian dollar (AUD)
The minutes from the Reserve Bank of Australia’s (RBA) latest policy meeting will be closely watched by AUD investors this week. If these reiterate the bank’s desire to maintain its restrictive monetary policy, the Australian dollar (AUD) may strengthen.
South African rand (ZAR)
Movement in the South African rand (ZAR) is likely to be linked to the South African Reserve Bank’s (SARB) latest interest rate decision. While no policy changes are expected from the SARB this week, ZAR investors will be looking for more insight into how the recent lowering of South Africa’s inflation target might impact policy in the medium term.
Canadian dollar (CAD)
Canada’s latest consumer price index may lift the Canadian dollar (CAD) at the start of this week, as another robust inflation reading should temper Bank of Canada (BoC) rate-cut expectations.
New Zealand dollar (NZD)
In the absence of any notable domestic data, the New Zealand dollar (NZD) is likely to take its cues from wider market trends this week. If a cautious mood prevails, the ‘kiwi’ is expected to struggle.
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