October 21, 2021
GBP/USD: Sterling traded near a one-month high against the dollar on Wednesday after traders said a dip in September inflation was unlikely to stop the Bank of England from raising interest rates soon. Consumer prices rose 3.1% on an annual basis in September, easing back from 3.2% in August. The pound fell in mid-European trading but was back at $1.3823. The decline in the US dollar, as well as the prospect of tightening monetary policy in England, create excellent conditions for further pound’s growth. At the moment, market participants expect that the Bank of England will raise the rate in November. Immediate resistance can be seen at 1.3830. A breakout to the upside can trigger growth towards 1.40.
EUR/USD: The euro strengthened on Wednesday amid rising stock indices, lower demand for safe haven assets, and doubts that the Fed will start cutting its quantitative easing program in November. The greenback hit a one-year high against a basket of other currencies last week as market participants ramped up bets that the Fed will raise rates sooner than expected to stop rising price pressures. Those bets have faded, however, while investors are pricing for even more aggressive rate increases in other countries. Immediate resistance can be seen at 1.1660. A breakout to the upside can trigger growth towards 1.1720.
USD/CAD: The Canadian dollar edged higher against the U.S. dollar on Wednesday as domestic data showing an 18-year high for inflation supported the market’s hawkish outlook for the Bank of Canada, offsetting a drop in oil prices. Canada’s annual inflation rate climbed to 4.4% in September, driven by rising transportation, shelter, and food prices, putting the focus on the Bank of Canada ahead of a rate decision next week. Immediate support is seen at 1.23. A breakout below could take the pair towards 1.2250.