Governor Mark Carney signalled that Britain’s “recovery has finally taken hold”, comments which could see the pound gain further ground against under pressure rivals. The US dollar stumbled late, weakening against the yen, euro and pound after a prepared statement from Janet Yellen ahead of her confirmation hearing as the next Federal Reserve chair suggested quantitative easing will continue for longer. However, limiting the US dollar’s drop is a declining euro. Weaker exports and a strong currency are hurting the eurozone’s two biggest economies according to experts after both Germany and France posted worrying flash estimates for third quarter GDP.

Sterling

Britain’s jobless claimant count fell by 41,700 in October, better than forecasts of 35,000, while September’s reading was revised to a fall of 44,700; the lowest since 1997. Crucially, Britain’s overall unemployment rate unexpectedly fell to 7.6 per cent in the third quarter, the lowest in more than four years, moving a step closer to the BoE’s 7 per cent target which may open the door to higher interest rates. The BoE’s inflation report offered a big vote of confidence in the economy, with Governor Mark Carney saying “the recovery has finally taken hold.”

US dollar

The US dollar took a late tumble as the Federal Reserve’s taper debate once again shifted against the US currency. A prepared statement from Janet Yellen, the expected replacement for Ben Bernanke as the next Federal Reserve chair, was released prior to a confirmation hearing. The comments struck a dovish tone, suggesting to market participants that US quantitative easing may continue for longer. This helped to lift equity markets globally and weighed on the US dollar.

Euro

Weaker exports and a strong currency are hurting the eurozone’s two biggest economies according to experts, after both Germany and France posted worrying flash estimates for third quarter GDP. Early release showed Germany, Europe’s growth-engine economy, slowing to a pace of 0.3 per cent (q/q) which was less than half the 0.7 per cent expansion seen in the second quarter. France’s economy unexpectedly shrank by 0.1 per cent after a 0.5 per cent Q2 expansion, a result that is likely to raise more question marks about the euro area’s economic recovery which may require more aggressive monetary easing from the European Central Bank.

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