GBP

Sterling has recovered moderately after hitting new 2021 lows against the dollar, and 2-month lows against the euro yesterday. Data released this morning showed Britain’s economy barely grew in October, even before the emergence of the Omicron coronavirus variant, further denting expectations that the Bank of England will raise interest rates next week for the first time since the pandemic. Gross domestic product edged up 0.1%, weaker than expected and slowing sharply from monthly growth of 0.6% in September. It is now expected that the BOE will wait until next year before raising borrowing costs. France is planning to ask the EU to begin “litigation proceedings“ if the ongoing row over post-Brexit fishing licenses is not resolved. The European commission has said the dispute must be settled by today, but Downing Street said on Thursday it did not recognise the deadline, threatening to further inflame tensions between the nation.

EUR
EUR/USD remains within a tight range in early trading. The single currency fell 0.4% against the greenback on Thursday, the most in 2 weeks after Reuters reported that the European Central Bank will extend its Pandemic Emergency Purchase programme (PEPP) in the light of the new covid variant. Germany’s consumer price inflation rose over 5% in November following a 4.5% rise in October, its highest level since 1992 .

USD
The dollar has found some support in early trading, buoyed by risk aversion sentiment. Traders will now eagerly await Inflation date due this afternoon. Markets have been pricing in the possibility of a rate hike cycle from the Federal Reserve Bank next year amid worries about the persistent rise in inflationary pressures, and the consumer price index will influence the central bank’s decision to taper its bond buying scheme at a faster pace and open the door for interest rate rises. American consumer prices, which have already jumped more in the last 12 months than at any time in the last 70 years are set to take another leap forward. Economists are forecasting that the index will rise to 6.8% year on year for November, up from 6.2% in October.