Daily Update 07/01/2022

Yesterday’s Overview

Lower oil prices were the biggest market driver yesterday causing both the NOK and CAD to weaken versus GBP. GBPCAD extended its climb higher to new 9-month highs, and GBPNOK hit 5-month highs.

Not a market mover for GBP but construction PMIs fell shy of expectations to 50.4, but stay in expansion territory (above 50).

Market moves were very minimal otherwise in the absence of any major data points as can be noted by the daily GBP vs G10.

Stocks dropped late in the evening following downbeat economic warnings from Goldman Sachs, Bank of America, Morgan Stanley and JP Morgan.

Today’s Overview

Data this morning from Halifax showed that house prices fell for the third consecutive month by 2.3% – the fastest pace in 14 years. The average house now costs £285,579. No impact on GBP at the moment, but looking into next year, the UK’s sensitivity to the housing market will be one of the headwinds that GBP could face next year.

AUD has shrugged off the slower growth figures early this morning which came in at 0.6% for the third quarter versus the expected 0.7%. GBPAUD still remains below the March resistance levels mentioned in yesterday’s report.

China announced 10 new measures as the country continues to shift from its zero Covid-19 policy. The measures include allowing people to quarantine at home, scrapping test requirements in public spaces, and accelerating vaccinations amongst the elderly.

Looking at how the USD and stocks have performed this week, despite numerous announcements from China, it seems that the shift in China could well be priced in for now. Macro data points, in particular next weeks US inflation figures, will likely drive risk appetite and market direction going into year-end. A higher inflation print will likely cause risk to come off, dragging GBP lower and USD higher.

For today focus will be on the eurozone GDP figures, as a higher print should give the EUR room to gain. And then later today, we have the Bank of Canada’s interest rate decision. Money markets are more on the side of a 0.25% rate hike whilst analyst expectations are for a 0.50% rate hike. Thus, a hawkish surprise and we would expect CAD to gain, thus causing GBPCAD to drop off its March highs.

Equals Market Analysis– 07th December 2022

Today’s Market Rates

Today’s Interbank Rates at 09:22 am against sterling movement.

GBP>EUR – 1.1595

GBP>USD – 1.2146

EUR>USD – 1.0478

GBP>CAD – 1.6611

GBP>AUD – 1.8158

GBP>SEK – 12.645

GBP>AED – 4.4587

GBP>HKD – 9.4630

GBP>ZAR – 21.032

GBP>CHF – 1.1448

(https://frank-exchange.com/)

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