Daily Forex Report 01-Nov-2022: GBP consolidates against USD, European hawks direct euro.

Rate hikes are here to stay as inflation hits the Eurozone

European Inflation isn’t slowing down any time soon. In fact, at 10.7%, September figures grew even higher than expected.

European Central Bank president Christine Lagarde has been vague about the bank’s interest rate plans, but investors expect the hawks to drive policy in the near future, if the rise in the EUR/USD pair is any indicator.

The pair dipped immediately another the announcement but has since added 0.4%, reaching just below parity at US$0.992 at the time of writing.

But some headwinds are expected in anticipation for the US Federal Reserve’s interest rate decision tomorrow, as hawkish confirmation will likely motivate what has been a softer US dollar of late.

EUR/GBP similarly dipped and recovered and remains relatively flat at 86.1p.

Sterling is currently swapping for 1.151 US dollars, with cable remaining compressed by the greenback’s continued strength among the G10 set.

Luckily the pair has a 3% boost achieved from a buoyant October behind it.

Cable’s strong October added 3% to the pair – Source: capital.com

Today’s UK house price data will be a significant pressure point for the pound though- The Nationwide House Price Index was up 7.2% year on year in October, the smallest increase since April of 2021 and slowing sharply from a 9.5% rise in September.

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