- EUR/GBP will end a torrid week trading at lows amid the euro’s overall underperformance on Friday amid European gridlock fears.
- The pair is back below the 0.8400 level and targeting 21-month lows.
EUR/GBP has turned sharply lower on the last trading day of the week. Falling from levels touched in the Asian session above 0.8420 to below 0.8400 as it anticipates a test of 21-month lows touched earlier in the week at 0.8385.
One of the key reasons of the recent downturn in the EUR/GBP currency pair is the euro’s underperformance. Which comes with concerns over a quick deterioration in the eurozone economy as the pandemic grips the continent.
Begining Monday, Austria will impose a total blockade on all persons for 20 days. With restrictions remaining for the unvaccinated after that. Furthermore, the country stated that all citizens must be vaccinated by February 1, 2022, or face stiff penalties. From a financial market standpoint, the fact that Germany appears to be closely following is even more concerning.
On Friday, Germany’s health minister warned the country’s health condition had deteriorated to the point where a comprehensive lockout, even of vaccines, could not be ruled out. “A total embargo for Germany would be very terrible news for the economic recovery”. Says a senior portfolio manager at Swiss asset firm Vontobel.
Negative news on the pandemic front in Europe has largely overshadowed a German PPI report
A significantly higher-than-expected German PPI figure for October. As well as hawkish comments from outgoing ECB Governing Council member and Bundesbank President Jens Weidmann, have largely been overshadowed by negative news on the pandemic front in Europe. To be honest, Weidmann is a well-known hawkish voter who has spent the previous decade unable to sway ECB policy. Which is dominated by moderate voters, so his remarks are unlikely to sway the euro. Weidmann is stepping down at the end of the year.
The dip on Friday brings an end to a tumultuous week for EUR/GBP. The pair has lost more than 1.5 percent after peaking above 0.8500. And is now trading around 0.8400, its lowest weekly performance since March 2020. Apart with the severity of the European Covid-19 crisis worsening over the week, the pair has also been pulled down by strong macroeconomic data from the UK.
In a report earlier this week, the latest employment data showed unemployment did not rise after the end of the UK government’s leave scheme at the end of September. Additionally inflation rose more than expected for October.
The October retail sales report released on Friday before the European open beat expectations.
More recently, the October retail sales report released on Friday ahead of the European open beat expectations. Although economists attribute this to consumers filing their holiday/end-of-year shopping amid supply chain concerns. Currency strategists also touted the ongoing story of divergence between the BoE and ECB as a negative.
Many expect the Bank of England to begin raising interest rates in December. While senior ECB policymakers like President Lagarde have been attempting to steer the market away from rate hikes by 2022. Currency markets overlooked comments from ECB hawkish line member Jens Weidmann, who is leaving the bank at the end of the year, and the Bank of England’s chief economist.
In other news, the tone of Brexit developments has shifted this week, with most market participants expecting the UK and EU to finally resolve their disputes over the Northern Ireland Protocol’s implementation.
Bond market movements, which reflect decreasing European economic pessimism, are likely to be a factor. German 10-year rates plummeted 7 basis points this week, to just around -0.35 percent, their lowest level since mid-September, while UK 10-year yields declined less than 5 basis points and remain well above last week’s low of 0.82 percent.
Microsoft clearly engages in the metaverse using Q2 earnings call
Satya Nadella, CEO of Microsoft, revealed his vision for the metaverse at the company’s Q2 2022 earnings call.
Overall, the company’s Q2 2022 filing showed a significant increase in cloud-based services. Microsoft reported $51.7 billion in revenue, a 20% increase over the previous year. Intelligent Cloud revenue was $18.3 billion, a 26 percent increase over the previous year. Azure drove a 29 percent increase in sales for server goods and cloud services. As well as a 46 percent increase in revenue for other cloud services.
Among the trends noted by Nadella on the earnings call was a “structural shift in PC demand.”
According to Microsoft CFO Amy Hood, Windows revenue from PC manufacturers increased by 25%, which was “far over expectations”. She stated that demand was being driven by the PC market’s success, particularly in the commercial category.
According to an earnings call transcript obtained on the financial blog site Seeking Alpha, Nadella envisions the metaverse as the next wave of the Internet. “Just as the initial wave of the Internet has allowed anyone to construct a website, I believe the next wave of the Internet will be a more open world where people, whether companies, game developers, or anyone else, may create their own metaverse world,” he stated.
“The first place we see this is the increasing digitization of people, places, and things to truly enable organizations automate operations at the next level,” he explained. “So, today, we have a number of examples of customers engaging with us through Azure IoT, Digital Twins, and Mesh. So that’s what you’ll see in Azure, and we’re investing heavily on it.”
Nadella sees prospects for Dynamics 365 Connected Spaces further up the software stack. This in-development technology is to control physical operations in physical areas such as a store, a connected factory, or a building. “We now have a suite that powers entirely by connected spaces,” he explained. Microsoft’s goal, he noted, is to automate physical operations.
Style.me introduces its wearable NFTs in the metaverse
Style.me, the industry-leading 3D fashion technology company, has launched a new innovative offering that enables designers to become metaverse-capable creators. In addition this latest step extends the company’s solutions into the world of digital fashion and NFTs. Moreover building on its growing success in virtual fitting and styling.
The company Style.me mints and distributes fashion NFTs
Style.me creates and distributes fashion NFTs, allowing people to wear, share, and use them across the metaverse. In addition, the company gives its partners the ability to bring their physical collections into the digital realm through bespoke “phygital” experiences.
The company Style.me’s plug-and-play technologies will allow metaverse projects to make digital fashion accessible to their communities. New experiences, such as virtual runway presentations, exhibitions, and live events, will be possible for designers and companies.
Style.me, with its 3D and AR technologies, is at the forefront of making digital fashion more accessible
Fashion NFT utilities are now limited, and Style.me is at the forefront of making digital fashion more accessible with its 3D and AR technology.
Style.me’s President, Rufus Parkinson, stated. “Style.me’s mission has been to enable consumers to see and interact with fashion in the digital environment since its inception. We believe that digital fashion and NFTs will alter the industry by allowing us to leverage our patented technology to open up a new dimension of user experiences.”
Combined with blockchain technology and the rapid expansion of the metaverse, digital fashion will explode in the next few years. Morgan Stanley estimates that the premium digital fashion sector alone will reach $20 billion by 2030.
Style.me’s goods are already in high demand, with consumption rising 386 percent in the last year, and this additional fashion NFT offering offers up even more prospects for growth in the digital fashion industry.
Metaverse: Tencent is updating QQ with the Unreal game engine
According to an upgraded version of the program, Tencent Holdings has stealthily integrated the Unreal Engine video game engine into its increasingly obsolete QQ messaging network. Hence, analysts believe the move is part of the social media and gaming giant’s entrance into the metaverse.
According to LibChecker, a third-party app inspection tool, the Shenzhen-based company updated QQ last month. The new version, which was formerly a chat app, includes portions of the Unreal Engine video game engine.
Tencent launched a new app feature called Super QQ Show, which is a 3D interactive arena where users can socialize, watch shows, and play games, at the same time as the update. As a result, observers claim the move is Tencent’s latest attempt to establish a footprint in the metaverse.
The decision also demonstrates Tencent’s commitment to resuscitate QQ, its second most popular messaging platform behind WeChat with 590 million monthly active users, which had fallen out of favor in recent years as Chinese netizens shifted their attention to short videos and other platforms.
In China, the metaverse is gaining traction. Although the country has not yet developed a national plan for the concept, like South Korea has, officials in some key cities have pushed businesses to investigate it. For example, one of four frontiers to explore in Shanghai’s future five-year plan is the metaverse.
The Super QQ Show is currently under testing by a small number of users. Tencent staff uploaded screenshots and video footage of the functionality. Which shows players dressing up their avatars in 3D, decorating their homes, and visiting others. Thus similar to Nintendo’s Animal Crossing video game franchise.
The Unreal Engine is utilized in successful games such as Bioshock and Mass Effect. Tencent owns a 40% share in Epic Games, which operates the engine in the United States. Last year, Epic Games was one of the first worldwide tech behemoths to make metaverse development a top priority. Epic’s flagship game, Fortnite, considered as one of the market’s leading metaverse initiatives.
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