Weekly Market Report: 15th – 19th November 2021

Monday 15th November-At the beginning of the session on Monday, the Pound remained relatively subdued as Brexit hope faded.  There were more concerns around the Northern Ireland protocol and that it could result in a trade war. However, the Pound did make up for some losses as Royal Dutch Shell announced that it would move its tax home and headquarters to the UK while comments from the Bank of England also helped the situation. At the end of trading, the Pound finished the day at 1.1797 against the Euro and 1.3409 against the US Dollar according to the Foreign Exchange Market.

 

The Euro lost ground yesterday as trade surplus had dropped considerably when compared to the same time last year. Furthermore, comments from the European Central Bank also weighed heavily on the single currency as it was announced that tightening policy now would do more harm than good.

It was also a quiet day for the US Dollar as a lack of data meant that the Greenback was not given any direction. Investors also took on a risk-on mood and that meant that demand for the currency disappeared although comments from the Federal Reserve helped to cap losses.

Tuesday 16th November

The Pound edged higher on Tuesday after impressive UK jobs data gave the currency a boost.

The data indicated that the labour market remains in a good position despite the furlough scheme coming to an end. This was also bolstered by comments from the Bank of England the day before, leaving investors to believe that a rate hike is coming this year. So, this saw the Pound finish the day at 1.1862 against the Euro and 1.3425 against the US Dollar according to the Foreign Exchange Market.

The Euro continued to struggle and even positive results relating to GDP growth and employment couldn’t give it the boost it needed. However, the downside came as a result of its negative correlation with the US Dollar and ongoing tensions at the Poland and Belarus border.

Through trading on Tuesday, the US Dollar strengthened and this came after the release of retail sales figures that were better than expected. Domestic sales had increased by 1.7% last month which came in above expectations and that was during a period of supply chain issues and increasing prices.

 

Wednesday 17th November

 

Thursday 18th November

The Pound lost momentum on Thursday as a sell-off saw the currency lose some of its gains.

There was a lack of data driving the Pound in any direction while ongoing concerns around Brexit also weighed heavily on the currency. As a new fishing dispute with Denmark broke out, it seems as though the currency might face some turbulent times in the near future. At the end of trading, the Pound finished at 1.1874 against the Euro and 1.3499 against the US Dollar according to the Foreign Exchange Market.

The Euro managed to make up some ground after hitting new lows but this looked to be more of a technical correction than one that is driven by other events. The European Central Bank speeches helped the single currency to recover as policymakers avoided any comments that might have caused problems for the currency.

It was a mixed day for the US Dollar yesterday as it started the day on a downward trend following low Treasury yields and investors taking on a risk-on mood. The Philadelphia Fed manufacturing index came in strong, helping the safe-haven currency to recover later in the day. However, the gains were capped as initial jobless claims came in higher than expected.

Friday 19th November

The Pound rounded off Friday in a good position after positive data releases helped to give it some upward momentum.

The higher than expected inflation figures released last week gave the currency a boost while the economy continued to thrive but investors also had their eye on lockdowns across Europe as Covid-19 cases continue to rise rapidly. This meant that the currency finished the week at 1.1921 against the Euro and 1.3447 against the US Dollar according to the Foreign Exchange Market.

The Euro was relatively muted on Friday as investors reacted to news of growing Covid-19 cases. With Austria and Netherlands bringing in further lockdowns, it looks as though the economy across the Eurozone is going to slow down. This comes as supply chain issues are already weighing heavily on the single currency while high inflation is also causing the Euro to struggle.

The US Dollar got a welcome boost from officials at the Federal Reserve after they suggested that monetary stimulus might be tapered faster than expected as the economy continues to make a rapid recovery while high inflation is also helping to move things along.

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