GBP

Sterling had a volatile afternoon yesterday, losing around half a cent against the euro but gaining 0.5% against the dollar. It remains steady against both in early trading. Yesterday’s moves came when the release of weaker than expected US GDP data coincided with ECB Chief Christine Lagarde’s press conference following their policy meeting in which she indicated that inflationary pressures were a concern. The pound’s moves today could be dictated by any further escalation in the fishing row with France. Last night, foreign secretary Liz Truss summoned the French ambassador to the foreign office to explain the “disappointing and disproportionate threats made against the UK and Chanell isles“. French ministers warned this week they will block British boats from some French ports and tighten checks on vessels travelling between France and the UK if the issue of post-Brexit fishing licenses are not resolved by Tuesday, as well as threatening the electricity supply to the Channel Islands. UK ministers met on Thursday to consider the response, with the prospect of tit-for-tat action if France carries out its threats.

EUR

The euro is consolidating today after its biggest daily rise since May against the Dollar yesterday afternoon. The single currency’s gains came in the aftermath of poor US data and ECB chief commenting that “the phase of rising inflation will last longer than expected“. France’s preliminary third quarter gross domestic product (GDP) rose 3% to beat market forecasts of a 2.1% rise. French Finance Minister Bruno Le Maire told France Info radio the figure was an “exceptional result” that showed the economy was heading in the right direction. GDP data for the whole bloc as well as inflation data are due for release later today.

USD

The dollar faced heavy selling pressure on Thursday afternoon after the US Bureau of Economic Analysis’ first estimate showed that the US economy grew by only 2% in the third quarter and this morning it hovers near its lowest level in nearly a month against its major peers. The green back was also undermined as a rally in world equity markets sapped demand for “safe haven“ assets. Inflation data in the form of Core Personal Consumption Expenditures Price Index (PCE) is released later today.

Economic Calendar

10.00 am EUR Consumer Price index
01.30 pm US Core Personal Consumption Expenditures
02.45 pm Chicago Purchasing Managers Index
03.00 pm Michigan Consumer sentiment Index