EURGBP is closing in on the strongest level since 2016, only seen briefly since the Brexit referendum. The DXY closed in negative territory yesterday after a three-day rally, as Treasury bond yields decline.
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January 20, 2022
GBP/USD 1.3629 GBP/EUR 1.2007 EUR/USD 1.1351 USD/CAD 1.2495 EUR/CHF 1.0381 EUR/SEK 10.3479 EUR/NOK 9.9710 EUR/DKK 7.4421 USD/ILS 3.1378 AUD/USD 0.7231 NZD/USD 0.6771 USD/SGD 1.3462 USD/JPY 114.25 USD/CNH 6.3466 USD/INR 74.4025 EUR/ILS 3.5613 GBP/ILS 4.2751 USD/ZAR 15.2568
Despite ongoing political uncertainty, the Pound gained 0.2% yesterday to trade at two-year highs of 83.14 pence against the Euro. The pair is approaching its strongest rate since 2016, with the next big level to test at 83p, an area that the pair only dipped below briefly since the 2016 Brexit Referendum. GBPUSD is trading 0.2% higher at time of writing.
Following yesterday’s CPI print, Andrew Bailey told lawmakers that the central bank remained concerned with the trajectory of inflation, confirming that there is some evidence of second-round inflation effects. Bailey cited that the MPC are ready to act when necessary, boosting expectations of another rate hike in February.EUR
Christine Lagarde has reconfirmed her view this morning that inflation will stabilise and gradually start to slow during 2022, although she suggested that the decrease will be less than predicted a year ago. The ECB President cited that the central bank does not need to react as quickly or aggressively as their US and UK counterparts, however remain on hand to respond if the data and facts require it.
EURUSD is trading 0.4% higher on yesterdays open, after regaining some of its losses from Tuesday. German inflation hit forecasts, to tick 0.1% higher on the previous month. Investors await today’s European inflation data and monetary policy meeting accounts.USD
Following three consecutive days of gains, the Dollar closed in negative territory yesterday, as declining Treasury bond yields added pressure to the greenback. The DXY is down 0.3% on yesterday at time of writing. Upbeat earnings reports from the likes of Morgan Stanley and Procter & Gamble failed to boost sentiment on the dollar, although futures on the S&P and Nasdaq rose 0.2% and 0.3% respectively.
Joe Biden weighed in on ongoing inflationary pressures, confirming that he supports the Federal Reserve’s plan to scale back monetary stimulus to manage the pace.ASIA/PACIFIC
Chinese lenders cut borrowing costs for a second consecutive month as the People’s Bank of China pledged more easing to stabilize the economy. The PBOC cut its policy interest rate for the first time in two years earlier in the week. The Yuan was little changed against the Dollar. The Hang Seng gained 3.4%, whilst elsewhere stocks declined. The MSCI Asia Pacific Index fell 1.3%.ILS
USDILS climbed 0.4% yesterday, with the pair trading just above 3.1400 at time of writing. Investors await industrial production and inflation expectations from Israel today.Data & Events
Euro Area – Core Inflation
ECB Monetary Policy Meeting Accounts
US – Continuing and Initial jobless claims
Philadelphia Fed Manufacturing Index
Existing Home Sales
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