Pound slides as UK inflation hits 40-year high
The pound fell sharply yesterday after the UK inflation rate jumped from 7% to 9% – its highest level since 1982.
The euro was able to trend broadly high last week, in spite of the latest EUR data releases largely printing below expectations.
The latest Eurozone manufacturing and services PMI releases and German retail sales came in below forecast, raising some concerns about the state of the Eurozone economy in the last quarter of 2021.
Not all EUR data disappointed however, with November’s consumer price index reporting that inflation in the bloc rocketed up to 4.9%, the highest reading since July 1991, although this was largely ignored due to the European Central Bank’s (ECB) continued commitment for leaving its ultra-accommodative monetary policy in place.
Meanwhile the euro fared better than many of its peers amidst the Omicron driven selloff at the start of the week, as more modest expectations for monetary tightening from other central banks helped to limit the pricing in of ECB policy divergence.
The euro stumbled out of the gate this week, as data showing a whopping 6.9% contraction in German factory orders in October, alongside another weak German ZEW economic sentiment index has undermined confidence in the Eurozone’s largest economy.
Elsewhere EUR investors will be keeping a close eye on European Covid developments this week, with any signs that countries may need to impose stricter restrictions, likely to further weaken the single currency. 
The latest Eurozone manufacturing and services PMI releases and German retail sales came in below forecast, raising some concerns about the state of the Eurozone economy in the last quarter of 2021.
Not all EUR data disappointed however, with November’s consumer price index reporting that inflation in the bloc rocketed up to 4.9%, the highest reading since July 1991, although this was largely ignored due to the European Central Bank’s (ECB) continued commitment for leaving its ultra-accommodative monetary policy in place.
Meanwhile the euro fared better than many of its peers amidst the Omicron driven selloff at the start of the week, as more modest expectations for monetary tightening from other central banks helped to limit the pricing in of ECB policy divergence.
The euro stumbled out of the gate this week, as data showing a whopping 6.9% contraction in German factory orders in October, alongside another weak German ZEW economic sentiment index has undermined confidence in the Eurozone’s largest economy.
Elsewhere EUR investors will be keeping a close eye on European Covid developments this week, with any signs that countries may need to impose stricter restrictions, likely to further weaken the single currency.
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)
