Potential Rate Rise Curbing Sterling Losses
Risk conditions curbed Pound selling on Friday with some evidence of profit-taking on short positions (bets on Pound dropping), especially given the potential for the Bank of England to increase interest rates at the December policy meeting. Sterling edged above 1.3400 to the dollar while the Euro retreated to near 1.1710.
The dollar very much held the upper hand on the back of US CPI data for October showing headline inflation rising to 6.2%, its highest level since late 1990. The core rate also hit 30 year highs, at 4.6%. In level terms, the firmer tone to the dollar was reflected in EUR/USD falling below $1.1500 to a near year to date low near $1.1430.
The Pound opened today slightly higher at 1.3440 to the dollar. Comments from Bank of England officials testimony to the Treasury Select Committee will be watched closely today.
Datawise this week, a busy schedule of data releases awaits. This includes UK labour market data which will be the first reading from the post -furlough scheme period whilst Retail sales data from the US and UK for October will be assessed to see how consumer spending performed at the start of Q4.