Daily Forex Market Report 10-Nov-2022: GBP, Euro fall against US dollar as republican wave becomes a ripple

With equities underperforming, the US Dollar Index seizes the limelight

US election results continue to roll in, with the Democrats faring slightly better than expected, although both chambers are still up for grabs.

Equities were pricing in a gridlocked government – historically a positive outcome for the stock market – but with the red wave looking like a ripple, the indexes closed significantly down.

Turmoil in the risk-on cryptocurrency sector surely didn’t help.

That was good for the US Dollar Index though, which closed above 110 having added 0.74%.

There has been a slight pullback to 109.94 this morning.

Cable dipped 1.6% as a consequence; at the time of writing the pair is trading at US$1.137, and could potentially dip further to support at US1.115.

GBP/USD awaits election results and US CPI data – Source: capital.com

EUR/USD has (just) managed to stay above parity despite closing 60 pips weaker yesterday having failed to break through the US$1.001 point- which is where resistance last stepped in on October 27.

Euro’s position will be influenced by the US year-on-year inflation rate due this afternoon.

Inflation is expected to moderate slightly from 8.2% to 8.1%, but any hawkish indications from the Federal Reserve (which would be likely if inflation runs hotter than hoped) could see the greenback gain.

Sterling ceded a percentage point in the EUR/GBP pair yesterday, which is now changing hands at a four-week high of 87.97p.

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