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Best performance since August

Best performance since August

The Pound put in its best performance since August last week against a basket of other majors. It closed 0.5% higher on a trade-weighted basis as markets anticipate an earlier interest rate hike by the Bank of England. While Cable had fallen by 2.0% in the week before last, last week, the GBP/USD currency pair reached interbank levels of 1.3657. UK issues in recent weeks have consisted of the energy crisis and labour shortages. However, Bank of England representatives have suggested rate hikes will be needed in order to battle spiralling inflation. In the week ahead, unemployment and industrial data will be released, which could influence the Pound exchange rate.

GBP/EUR touches eight-week highs

Sterling touched eight-week highs against the Euro last week, closing 0.71% higher. The Euro drifted lower against a lot of other currency majors last week, hitting its lowest level on a trade-weighted basis since July 2020, as Eurozone economic data continued to disappoint. Many central banks in major economies are discussing the removal of monetary stimulus. In contrast, the European Central Bank seems at odds with others, with President Christine Lagarde suggesting fresh measures may be needed next year. German data will be out in the week ahead as well as the Eurozone ZEW Economic Sentiment Index, industrial, and trade balance stats. 

Disappointing jobs data

The Pound to US Dollar exchange rate ended four weeks of trending lower by climbing around 0.55%. However, on a trade-weighted basis, the US currency continued to strengthen against other currency majors. Last week, highly influential labour market data showed an unexpectedly weaker figure, despite a fall in the unemployment rate. This is the second month in a row that the US, the world's largest economy, has showed a slowdown in job creation, raising questions about the Federal Reserve's plan to ease pandemic-induced stimulus measures. In the week ahead, US inflation data will be out, as well as retail stats. 

RBNZ hikes interest rates 

Last week, the Pound closed lower against the Aussie Dollar for the third consecutive week, while the Sterling to Kiwi exchange rate touched six-week highs, closing 0.71% higher. The Reserve Bank of New Zealand hiked the Official Cash Rate from 0.25% to 0.50%, with the committee noting that further removal of monetary stimulus is expected over time. New Zealand card spending stats will be out on Monday, before manufacturing, services, and inflation data later in the week. Meanwhile, in Australia, Reserve Bank of Australia Governor Guy Debelle will be making a speech this week, before highly influential consumer confidence and labour market data is released. The Australian Unemployment Rate is expected to increase from 4.5% to 4.8%, which could weigh on the Aussie Dollar. Meanwhile, this week and heading into next week, a few influential Chinese stats are out, including growth and inflation numbers. Chinese data can be influential for both Australia and New Zealand as their largest trading partner. 

Canadian labour market tightens 

Last week, the Pound to Canadian Dollar exchange rate reached its lowest level since May 2021, closing the week 0.95% lower. However, Canadian employment data beat expectations. The September Employment Change figure, which highlights how many people have been employed, rose by 157.1K, as opposed to the 65.0K forecast, and followed an August reading of 90.2K. Wages also showed an increase. It's an incredibly quiet week by way of Canadian data, leaving the Loonie to fluctuate on aspects such as commodity prices—namely oil, its most lucrative commodity—and geopolitical developments.