It’s difficult to characterise the British Pound’s future after it lost five straight days to the US dollar last week. However, a number of noteworthy data releases this week could support the pound and avert a dramatic collapse. The week’s major event is Wednesday’s inflation report, which is expected to cause the market to brace for a significant decline to 4.5% YoY from 6.7%.
With ECB official Luis de Guindos set to deliver the keynote address to open Euro Finance Week later today, the Euro rebounded from its lows of the previous week. This comes after ECB President Christine Lagarde’s remarks from last week, when she said that while inflation will continue to be high, rates will remain tight for a number of quarters. Despite this, the region’s economic prognosis is still dire.
As investors wait for the release of the October consumer pricing data in the United States tomorrow, the new week has begun with the US dollar down. This will provide insight into how well the Fed is doing in its fight to keep inflation from rising over multi-decade highs last year. In the end, a monthly increase in inflation of just 0.1% is anticipated.
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