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RationalFX: Sterling lacking direction

RationalFX: A string of poor UK data yesterday left sterling struggling against all majors. The Office for National Statistics (ONS) stated that the UK economy grew 1.3% in the three months to the end of September.

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RationalFX


GBP

This was largely below forecasts of 1.5%. As a result we have seen GBP/USD trading at its lowest level in 2021.

This comes after last week’s shock decision from the Bank of England who voted to keep interest rates on hold. The 7-2 decision shocked markets as a 15 basis point rise was looking priced in. Now the tables have turned, and after the staggering US inflation release on Wednesday, markets expect the Federal Reserve to be the first central bank to raise rates.

Brexit worries have also resurfaced as threats of the UK triggering Article 16 have come to light. Rising tensions and growing uncertainty are a recipe for disaster in the FX markers so we expect further downside for sterling should this not resolve itself quickly.

USD

Across the pond, the dollar has dominated markets this week. This does now leave room for a correction as some investors believe it may be overbought. We expect volatility as we move into the weekend.

Key announcements

15:00 – US Michigan Consumer Sentiment Index (Nov) PREL – Expected 72.4 from 71.7 previous

Source : ETFWorld.co.uk

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