Weekly Roundup: Pound undermined by cooling inflation
Currencies Direct November 20th 2023 - < 1 minute read
An upbeat mood at the start of the week saw the increasingly risk-sensitive pound rise on Monday.
Sterling’s upside was then reinforced by a broadly positive UK labour market report on Tuesday, with the jobless rate holding steady rather than rising as forecast.
However, GBP exchange rates fell sharply midweek after UK inflation cooled more than expected, sparking a pullback in Bank of England rate hike bets.
Hawkish comments from BoE rate-setter Megan Greene lent the pound some support on Thursday, although the currency failed to recoup Wednesday’s losses.
Fresh selling pressure then hit GBP on Friday. UK retail sales reported an unexpected contraction in October, prompting fears of a winter recession.
This week, all eyes are on Chancellor Jeremy Hunt’s Autumn Statement. If markets react favourably to what many expect to be ‘pro-growth’ measures, Sterling could climb.
On Thursday, however, the pound could weaken as the UK’s latest PMIs are expected to reveal another month of contracting activity in both the manufacturing and services sectors.
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Currencies Direct