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Risk-off sentiment sweeps market

Risk-off sentiment sweeps market

Last week, the Pound to US Dollar exchange rate reached its highest level since December 2020, before closing 0.91% lower. Meanwhile, against the Euro, the Pound touched its highest level since February 2020 and closed 1.12% lower. The Pound softened as risk-off sentiment swept markets as the new Covid variant increased uncertainty. Meanwhile, Bank of England Chief Economist Huw Pill suggested that elements for an interest rate increase, such as a strong labour market, had been met. Investors in Sterling will be looking toward the Bank of England's meeting in December to see if a rate hike will occur. In the week ahead, house and shop price data will be released, and BoE Governor Andrew Bailey will make a speech on Wednesday. 

Closing rally

The Euro experienced a 1.0% rally in the later sessions of last week but has pulled back during today's trading. In politics, Germany's new coalition government has set out plans for the most 'socially progressive government in a decade'. It's thought the new government will boost fiscal spending. The European Central Bank President Christine Lagarde is due to make some speeches this week, while inflation data will be released on Tuesday. 

Influential labour market stats ahead 

Last week there were some choppy trading sessions, but the US Dollar Index has begun this week unchanged from the start of last week. Federal Reserve Chair Jerome Powell has been renominated as the head of the central bank after US President Joe Biden praised his 'steady and decisive leadership'. In the week ahead, Powell is expected to speak multiple times and will be testifying at the House Financial Services Committee. Labour market data will be one of the main events in the week ahead, starting with the ADP Employment Change stat, which is often seen as a precursor to the highly influential Change in Non-Farm Payrolls number out on Friday. 

Claiming highs

Against the New Zealand Dollar, the Pound reached six-week highs and closed 1.8% stronger, while versus the Australian Dollar, Sterling managed to claim eight-week highs and closed 0.89% better off. In the week ahead, Australian manufacturing data will be released, ahead of highly significant growth rate stats. Trade balance, services, and building numbers will also make their way onto the market. Meanwhile, New Zealand will release Business Confidence and Building Permits ecostats. 

GBP/CAD reaches seven-week highs

The Pound climbed to reach its highest level in seven weeks versus the Canadian Dollar last week and closed 0.28% higher. Canadian Growth Rate data will be released in the week ahead, with forecasts to show a positive 3.0% rebound in the third quarter, following on from the second quarter's -1.1% reading. Other influential data this week will consist of Canadian Employment Change and Unemployment Rate numbers released on Friday.