Downturn in Market Mood Causes Pound to Struggle

At the start of the session on Tuesday, the Pound edged higher following the release of positive employment figures.

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Despite this, those gains were quickly lost during the afternoon as the market reacted to concerns around the end of the furlough scheme and how that impacted the jobs data. According to the Foreign Exchange Market, this saw the Pound finish at 1.1783 against the Euro and 1.3588 against the US Dollar. 

Following the release of the German ZEW economic sentiment index for October, the Euro lost some ground as it dropped further than expected, resulting in the worst reading since March 2020. The issue around supply bottlenecks and increasing inflation meant that investors were keeping their distance which does not bode well for the largest economy in the Eurozone. 

During the start of trading on Tuesday, the US Dollar slipped back although it managed to bounce back, after a drop in risk appetite meant that support for the safe-haven currency increased, eventually causing it to trade sideways. A near record high in the US jobs opening figure caused initial concerns that the labour market could slow down economic growth, all of which added to the drop in sentiment.

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