USD surges after US inflation soars, UK data disappoints - €/$ and £/$ touch lows

 Yesterday saw US inflation data reach far beyond expectations and the USD surged as a result – the market is convinced that the US will raise rates at least twice through 2022.

 Inflation in the US soared to its highest level since November 1990 with prices across the board moving higher, data showed yesterday. The headline rate hit 6.2%, compared to market estimates of 5.8%, while the core rate rose to 4.6% against expectations of 4.3%. This latest jump in price pressures will surely put to bed the multi-month ‘transitory’ argument and will add pressure on the Federal Reserve to hike rates sooner rather than later.

EUR/USD hit 1.1458 – the lowest since July 20

GBP/USD hit 1.3364 – an 11month low

 GBP: Resilience seems to be the name of the game for ££ - having survived some very weak sessions after the Bank of England failed to raise interest rates last week.

 More resilience will be needed for GBP to maintain current levels - UK economic growth data released early in the London session have not helped GBP/USD but prompted only a limited reaction in the markets. On the plus side, GDP in September expanded by 0.6% month/month, above the 0.4% expected by economists. However, the preliminary figures for the third quarter showed a growth rate of just 6.6% year/year, below the forecast 6.8%. Importantly - Industrial production and manufacturing output numbers were disappointing too.

 GBP/USD is trading under 1.3400 – if it hits 1.3315, it will be at the lowest level since Dec last year and probably break lower as a result.

GBP/EUR around 1.1690 is the mid of recent ranges – both GBP and the EURO are suffering.

 As Covid cases surge across Europe (German and UK figures are headlining, but stats are rising across all nations), the market will start to sell the shared currency if it looks as if the economic recovery will stall.