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EUR/USD strikes one-year low as US inflation prints at 30-year high

currency-newsEUR/USD strikes one-year low as US inflation prints at 30-year high
The US dollar struck higher on Wednesday, in response to a startling rise in the latest US consumer price index.

Trade in the pound, meanwhile, is a little mixed so far this morning, with GBP/EUR flat at €1.1681 and GBP/USD dipping to $1.3391. GBP/CAD is rangebound at C$1.6762, while GBP/AUD and GBP/NZD tick up to AU$1.8335 and NZ$1.9042 respectively.

Looking ahead, will a weaker-than-expected UK GDP limit any upside potential in Sterling today?

What’s been happening?

The US dollar strengthened yesterday, first being bolstered by a prevailing risk-off mood, before accelerating sharply after the latest US CPI figures reported domestic inflation rocketed to 6.2% in October.

The dramatic surge in inflation to its highest levels since 1990, underpinned the ’greenback’s rise as it stoked speculation the Federal Reserve may be forced to adopt a more aggressive stance on monetary policy.

The pound, meanwhile, was mostly subdued through Wednesday’s trading session as a result of ongoing Brexit jitters, with GBP investors growing increasingly concerned by the prospect of a UK-EU trade war, amidst the UK government’s threats to trigger Article 16 of the Northern Ireland protocol.

At the same time, in the absence of any notable EUR data releases, the euro struggled to find any strong directional bias yesterday.

What’s coming up?

Kicking off today’s session was the publication of the UK’s latest GDP figures.

Their release could see the pound face an uphill battle today, after preliminary figures for the third quarter reported a larger-than-forecast slowing of economic growth.

Accompanying the GDP release was the UK’s Q3 business investment figures, which could also sap Sterling sentiment after also printing below expectations.

On the other side of the Channel, the focus will be on the publication of the European Central Bank’s (ECB) macroeconomic projections. Will a cautious outlook from the bank dent euro trading sentiment today?

Meanwhile, the closure of US market for Veteran’s Day is likely to result in some thin trading conditions in the US dollar, potentially leaving it vulnerable to losses.
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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