Pound Gains as Strong Jobs Data Rekindle Rate Hike Hopes

Pound (GBP) Firms following UK Jobs Reports 

The Pound (GBP) climbed against most of its peers yesterday following some impressive UK jobs data, which suggested that the labour market remains strong despite the end of the government’s furlough scheme. 

This news, paired with comments from the Bank of England (BoE) Governor Andrew Bailey the day before, had the market once again betting on a BoE rate hike this year. 

Today, the UK’s latest CPI overshot forecasts by 0.3 percentage points, jumping from 3.1% in September to 4.2% last month. This could further boost the likelihood of a December interest rate rise. 

Euro (EUR) Stumbles despite Decent Data 

The Euro (EUR) struggled in yesterday’s session, despite generally positive results from the Eurozone’s quarterly GDP growth rate and employment change reports. 

The downside came amid the ongoing strength in the US Dollar (USD), which weighed on the Euro due to the currencies’ negative correlation, and rising tensions on the Poland-Belarus border

The Eurozone’s finalised inflation rate is unlikely to cause much movement today. Instead, EUR investors may look to speeches from European Central Bank (ECB) policymakers, including the bank’s president, Christine Lagarde. 

US Dollar (USD) Gains Ground as Retail Sales Beat Forecasts 

The US Dollar (USD) strengthened through Tuesday’s session, boosted in the afternoon by better-than-expected retail sales figures. 

US domestic sales increased by 1.7% in October, up from last month’s 0.8% rise and above expectations of 1.4%, despite supply chain issues and soaring prices. 

With seven Federal Reserve policymakers speaking today, it’s possible that some hawkish or dovish comments could cause movement in USD. 

Canadian Dollar (CAD) Subdued as Oil Prices Soften 

The Canadian Dollar (CAD) was muted yesterday, though it managed to gain on its weaker rivals, as oil prices edged down over the course of the session. 

Looking ahead, if Canada’s CPI this afternoon beats forecasts the it may prompt markets to price in an even earlier rate rise, thereby boosting CAD. 

Australian Dollar (AUD) Wobbles amid Wavering Market Mood 

The Australian Dollar (AUD) experienced some volatility in overnight trade as a shifting market mood caused the ‘Aussie’ to fluctuate. 

New Zealand Dollar (NZD) Buoyed by Lockdown Easing Announcement 

The New Zealand Dollar (NZD), however, trended higher overnight after New Zealand Prime Minister Jacinda Ardern announced an easing of lockdown restrictions in Auckland next month. 

Samuel Birnie

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