GBP

Sterling rose by almost a cent against the dollar and 0.4% against the euro as traders priced in an earlier rate hike by the Bank of England after yesterday’s policy meeting. The pound found favour when 2 policymakers voted to halt the central bank’s bond purchase programme, which is due to run until the end of the year. After the BOE raised their inflation rate forecasts, sterling interest rate futures priced in a 90% chance that the BoE would raise rates by February, up from just over 60% before. In early trading the pound remains steady in general, holding on to yesterday gains.

EUR

In an interview with CNBC, the European Central Bank President Christine Lagarde expressed her take on rising price pressures, dismissing higher inflation as temporary. Lagarde blamed much of the rise on supply disruptions and said inflation should stabilise next year. The final television debate before Sunday’s German election took place last night and polls indicate that the result could be closer than it has been at any time in Angela Merkel’s reign. Some pundits believe that its possible Germany could even be governed by its first ever three-party coalition .

USD
The dollar hovered above a one-week low versus major peers on Friday, after falling to its lowest level in almost month overnight. Demand for the safe haven greenback lessened when struggling Chinese property developer Evergrande announced it would pay its dollar bond interest payments to investors on Thursday. However, some holders of its offshore bonds said they had not received coupon payments by yesterday’s deadline limiting the dollar’s decline.

Economic Calendar

2.00 pm US new home sales