Forex Forum Latest Forex Market News and Updates, Nov-25, 2021
GBP/USD is defending minor bids while wavering around 1.3350 so far this Thursday, as it lacks a trading impetus amid a Thanksgiving Day holiday in the US.
The US dollar remains sluggish across its major peers, correcting some of its previous gains and lending support to the cable. Meanwhile, ongoing Brexit concerns, with France's pledge to continue its row over fishing rights with the UK, cap the upside attempts in the major.
The Pound to Dollar (GBP/USD) exchange rate dipped to fresh 2021 lows around 1.3320 before a tentative recovery.
The Pound to Euro (GBP/EUR) exchange rate was held in relatively narrow ranges
Strong Cost pressures in UK Manufacturing
The UK CBI industrial trends index strengthened to 26 for November from 9 the previous month, comfortably above consensus forecasts of 18 and the strongest reading since 1977. Exports posted their strongest reading since March 2019 and stock levels were very low while prices increased at the fastest rate since 1977 which will maintain underlying concerns over inflation pressures.
On the Other Hand, The US dollar rallied once again overnight after a more hawkish tone to the FOMC minutes and higher than expected PCE data. Some pre-holiday risk-hedging buying may also have flowed through currency markets with the US dollar being the market's favourite way to play the inflation/Fed-taper trade at the moment, especially with the euro languishing under a virus cloud. The dollar index rose by 0.35% t0 96.86 but has eased back to 96.75 in Asia as US stock index futures continue to rally. With volumes sure to be muted for the rest of the week, the US dollar remains vulnerable to a downside correction, with the dollar index's relative strength index (RSI) remaining in very overbought territory. Nevertheless, the index remains a buy-on-dips and could well move through 97.00 into next week.
Elsewhere, The US dollar was mostly flat yesterday ahead of the US Thanksgiving holiday. A risk-off market sentiment stimulated demand for the greenback because it keeps posting new year-to-date highs against most G8 currencies. On Wednesday, the Federal Reserve revealed the last FOMC meeting minutes, which showed that some participants would like to adjust the Quantitative Easing's taper pace and raise rates sooner than anticipated if inflation runs hot. The pair can correct to the 1.2625 level due to the local US holidays, but after that, the price will probably continue its upward movement towards 1.2700.
Euro (EUR) Dips as German Business Morale Drops
On the other hand, The Euro (EUR) weakened yesterday after the German Ifo business climate indicator for November fell for a fifth consecutive month, indicating business morale in the Eurozone's powerhouse economy is at a seven-month low.
The strong US Dollar also dented the single currency due to the negative correlation in the pairing, offsetting any support from a coalition agreeing to form a German government with Olaf Scholz as chancellor.
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