GBP

Sterling remains on the backfoot in early trading as renewed Brexit concerns and fears of what the end of pandemic furlough scheme will bring add to the pounds recent woes. France is expected to hit back at the UK after authorities denied permits for the vast majority of French fishermen to work in its waters and uncertainty looms for the future of almost one million workers who still receive furlough support as the government scheme ends today. Economists have warned that although many may find work in recovering sectors such as hospitality and travel, there is also likely to be a rise in unemployment due to new redundancies. Sterling showed little reaction to data released this morning which showed the economy improved better than originally thought in the second quarter

EUR

Strong dollar demand had pushed the euro down to its lowest levels against the greenback since July 2020. The Euro remained depressed amid divergence between the European Central Bank and the Federal Reserve Bank on tapering their stimulus schemes. French inflation rose slightly less than expected in September, but still reached its highest rate in nearly a decade. Inflation data for Germany and Italy is due for release later today.

USD
The dollar traded near a one-year high versus major peers on Thursday. A combination of high US bond yields and expectations that the federal Reserve Bank will begin tapering its bond buying scheme next month is fuelling the greenbacks rise. Yields on the benchmark 10-year Treasury note stood at 1.5341%, holding near a mid-June high reached Tuesday at 1.5670%.. The dollar index which measures the currency against a basket of six rivals, stood at 94.327, little changed from Wednesday, when it hit 94.435 for the first time since late September last year. Federal Reserve Chairman Jerome Powell testifies today before a House Committee and will likely repeat his “ ready to begin tapering” message of recent days.
Economic Calendar
10.00 am EUR Italy CPI
01.00 pm EUR Germany CPI
01.30 pm USD GDP
03.00 pm USD Chair Powell testifies