• richard evans

GBP remains supported on rate rise comments

Good morning


A US holiday today but that hasn’t stopped the headlines coming through thick and fast.


US nonfarm headline disappointed Friday although a sharp drop in the unemployment rate seemed to calm markets. Jobs growth has certainly slowed in recent months which will help doves at the Fed but tapering in the coming month does still look likely. Canadas employment numbers were better than expected however which helped push USDCAD lower from 1.2540 to 1.2455. where we currently trade.


GBP has performed well, helped by comments from BoEs Saunders who said Feb rate rise is fully priced in and even hinted of a possible shift higher in December, although worth bearing in mind that Saunders in a known hawk having voted to end asset purchases at last months meeting. Meanwhile BoEs Bailey warned that inflation will be higher than the Banks forecast. GBPUSD now 1.3650, EURGBP 0.8480 (GBPEUR 1.1790).


UK and EU remain at loggerheads over the Northern Ireland protocol, an easy solution is looking less likely, while EU faces additional problems as Poland sees mass protests over concerns that Poland may seek an exit from the EU, dubbed ‘Polexit’. Polands top court, staffed now by judges who are pro-government, have ruled some key EU laws are not compatible with Polands own constitution. As if all that wasn’t enough, Austria PM Kurz resigned over the weekend as talk of a corruption scandal emerges, replaced for now by the Foreign Minister Schallenberg.


Elsewhere, gas and energy prices continue to trade higher with stark warnings about considerably higher domestic fuel bills in the UK this winter. We are unlikely to see the issues Lebanon had over the weekend as the country was plunged into darkness after running out of fuel to power the electricity grid, only a US$100mio credit facility from the central bank meant fuel could be imported to keep power plants operational. How long that lasts remains to be seen. Russia continue to urge EU to approve the NordStream 2 pipeline to resolve gas supply and price issues.


Sydney lockdown has come to an end after three months or so, AUD uis back up to almost one month highs against USD, trading at 0.7340, while it is up at 1.0570 against NZD, levels not seen since July.


China insist Taiwan reunification will be fulfilled and although Taiwan in turn insist they will not bow to Chinese pressure, it is unlikely they can really prevent China from asserting their dominance.


And of course, the most important news from the weekend comes from my young footballers, playing a cup tie against the team top of the division above them. 3-1 down at half-time, they put on an incredible performance in the second half to emerge 5-3 winners. A stunning match. I wouldn’t be surprised if the new Newcastle owners were knocking on my door today………….



- 13.00 ECBs Lane speaks

- 15.45 ECBs Elderson speaks

- 00.01 UK BRC sales

- 01.30 AUS NAB confidence


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