Weekly Market Report: 18th – 22nd October 2021

Monday 18th October – During the session, the Pound slipped as further rises in gas prices placed pressure on the currency.

Following a pipeline capacity auction yesterday, it was clear that there was not going to be an increase in gas supplies from Russia into Europe. With no intervention from Moscow as promised, this saw prices rise and that meant that the Pound suffered as a result. At the end of trading, the Pound finished at 1.1826 against the Euro and 1.3731 against the US Dollar according to the Foreign Exchange Market.

 

It was a mixed day for the Euro as it strengthened against the Pound and the US Dollar although it slipped against many other peers during the afternoon. This loss of ground came following an improvement in market sentiment and that meant that investors showed an interest in assets that carried more risks while a lack of data also left the single currency open to offers.

The US Dollar firmed on Monday as the start of the day during the European session saw investors take a risk-off approach. Despite this, the safe-haven currency lost ground during the afternoon as US industrial production shrunk during September and risk appetite improved.

Tuesday 19th October

During trading on Tuesday, the Pound surged following the beginning of the UK’s Global Investment Summit with the government announcing that £9.7bn of foreign investment would be made into green industries.

Despite the initial gains, the Pound did lose ground following a market correction and warnings that the UK’s Net Zero strategy would cost the public. So, the Foreign Exchange Market indicated the currency finished at 1.1856 against the Euro and 1.3795 against the US Dollar.

It was a good start for the Euro as it firmed but then lost ground against many of its rivals after there was an unexpected contraction in construction output in the Eurozone coming in at -1.6% against the 2.5% that was forecast. Dovish comments from the European Central Bank.

The US Dollar slackened during the start of the session yesterday after a positive market mood meant that demand for the Greenback was limited. Despite this, the USD did manage to recover some of those losses during the afternoon as market sentiment eased, making it possible for the US Dollar to make up ground against some of its rivals.

Wednesday 20th October

On Wednesday, the Pound lost some ground following the release of the UK’s CPI which came in below expectations and that means that the chances of a rate increase at the Bank of Englands next policy meeting are highly unlikely.

Despite this, the currency did manage to retrieve some of those losses as it rebounded during the afternoon, making gains against many of its rivals. This saw it finish at 1.1865 against the Euro and 1.3825 against the US Dollar.

A lack of market-influencing data left the Euro struggling against its peers yesterday and this opened up the single currency to losses. There was further pressure mounted on the currency from the European Central Bank after it took a dovish stance as policymakers took a subdued approach to the high inflation rate across the bloc.

A big sell-off weighed heavily on the US Dollar yesterday as investors took a risk approach and looked at other assets. This upbeat mood was boosted by positive developments which indicate that the US economy is recovering, especially with lockdown restrictions easing and covid cases around the world in decline.

Thursday 21st January

It was a turbulent day for the Pound on Thursday although eventually, it managed to trend upwards thanks to news that UK public borrowing for this financial year was lower than expected.

However, the good news was offset by news that business optimism for Q4 had dropped, placing pressure on the Pound. At the end of the session, the Pound finished at 1.1866 against the Euro and 1.3793 against the Us Dollar according to the Foreign Exchange Market.

There was a lack of data across the Eurozone yesterday and that resulted in the Euro seeing very little in the way of movement. As the afternoon arrived, consumer confidence figures caused the single currency to move slightly but that was down to morale in consumers falling by less than expected.

The US Dollar was relatively rangebound yesterday as a mixed mood meant that it traded in a narrow range. However, its fortunes changed during the final hour of the European session as sentiment soured and that saw the US Dollar make up for some of its losses. So, will data released today cause the Greenback to make any significant gains?

Friday 22nd January

Friday was a mixed day for the Pound after it made up ground against many of its rivals but lost ground in other areas following the release of disappointing retail sales figures, even though PMIs were positive.

Both manufacturing and services PMI increased although poor factory output meant that any positives were quickly offset. As a result, the Pound finished at 1.1813 against the Euro and 1.3758 against the US Dollar according to the Foreign Exchange Market.

The Euro strengthened on Friday against many of its peers, regardless of the PMIs coming in slightly mixed as manufacturing came in higher than expected while services fell short. The single currency took advantage of a risk-off mood and that placed pressure on the riskier currencies, giving the Euro the chance to strengthen.

The US Dollar moved higher at the end of the week as the Greenback benefitted from a drop in risk appetite. The Markit PMI figures came in relatively positive and that helped to boost the US Dollar. However, manufacturing dropped slightly although the rise in services, which came in higher than forecasts meant that the US Dollar helped to offset any potential weakness.

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