Pound recovers on renewed BoE rate hike bets

CURR DIRStaying on top of the latest currency news can help you time your transfers more effectively, so find out what you should be looking out for over the next couple of weeks…

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GBP exchange rates rebounded over the last fortnight as traders began to price in a rate hike at the Bank of England’s (BoE) meeting next month.

GBP/EUR surged from below €1.17 up to a 21-month high of over €1.19, while EUR/GBP tumbled from near £0.86 to £0.84.

GBP/USD, however, ranged between $1.34 to $1.36, trending lower overall, and EUR/USD slumped from $1.16 to $1.13, a fresh 16-month low.

What’s been happening?

The pound regained ground against the majority of its rivals as strong jobs data and a ten-year-high inflation print boosted BoE rate hike bets.

The euro continued to slide as the US dollar strengthened, the European Central Bank (ECB) maintained its dovish stance and some countries on the continent reimposed lockdown restrictions.

The US dollar, meanwhile, strengthened after US inflation hit a 31-year high of 6.2%, bringing forward bets for a rate rise from the Federal Reserve.

What do you need to look out for?

The UK’s Markit PMIs will be the focus for GBP investors as we head into December. If business activity continues expanding strongly, Sterling could climb.

While there are many high-impact data releases on the way, EUR exchange rates could be primarily influenced by Europe’s Covid situation, particularly if more countries impose full lockdowns.

Finally, the US core PCE price index – the Fed’s preferred inflation measure – could further boost the US dollar by putting more pressure on the US central bank to raise the fed funds rate.

At Currencies Direct we’re here to talk currency whenever you need us, so get in touch if you want to know more about the latest news or how it could impact your currency transfers.

At Currencies Direct we’re here to talk currency whenever you need us, so please get in touch if you want to know more about the latest news or how it could impact your currency transfers. Since 1996 we have helped more than 325,000 customers with their currency transfers, so why not give us a call on 00351 289395739 to find out more or alternatively visit the website on https://www.currenciesdirect.com and register to get regular updates on the currency markets.

 

 

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