Exchange Rates

The British pound is 0.4 pct higher against the US dollar at 1.5926.
The British pound is 0.12 pct higher against the euro at 1.1800.

(Please note that your bank will access the above market rates but will sell on currency to you at another rate; this spread is where they make their money. However, an independent FX provider can also access currency at the above rates BUT will actively undercut the offer made by your bank, thus delivering you up to 5% more currency. Please find out more here.)

The bulls attack… but aggression kept in check ahead of tomorrow's employment data

Driving the recovery in the GBP today is the publication of stubbornly high inflation data out.

Ipek Ozkardeskaya warns however that today's British pound recovery will be capped:

"Released in the morning, the UK’s September CPI reading was higher-than-expected and gave a reason to GBP-bulls to attack the resistance at 1.6000. A higher inflation revived the anti-Carney trades: short BoE’s forward guidance/inflation knock-out framework, long GBP.

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"Technically, the bearish pressures are likely to limit the upside in the Cable but the option bets trail above 1.6025 ahead of the jobless claims scheduled tomorrow. The jobless claims are expected to have regressed (from -32’600 claimants to -25’000 in Sep); if true should reinforce the selling pressure in GBP.

"The 30-day mid-Bollinger band is still the reference support, if breached should deepen the damage to the recently violated uptrend channel.

"Looking at EURGBP, Jul-Oct downtrend top (broken on October 9th) is seen as the next key support at 0.843500. Traders are likely to remain on the long side of the play."

GBP in sudden plunge against US dollar

While the GBP initially enjoyed a recovery against the US dollar, there was a sudden about-turn in fortunes:

us dollar surges against the pound

"The dollar suddenly gained ground in mid morning European trade today as both EUR/USD and GBP/USD plunged more than 50 points in a matter of minutes despite relatively buoyant eco data from both regions. The move higher in the buck was likely caused by growing speculation that US legislators were getting close to a compromise on the US budget and debt ceiling deal with GOP expected to caucus at 1500 GMT today," says Boris Schlossberg at BK Asset Management.

US Senate leaders have expressed optimism after a flurry of negotiations on raising the federal debt ceiling to avert a potentially disastrous default.

They were also nearing a deal to end a partial government shutdown, now in its third week, congressional sources said.

A budget bill would also need to pass the House of Representatives. House Republicans triggered the whole political deadlock two weeks ago.

The US must raise its $16.7tn (£10.5tn) borrowing limit by Thursday.