Weekly Market Report: 22nd – 26th November 2021

Monday 22nd November – As the session on Monday unfolded, the Pound slipped lower as the Bank of England made some cautious comments and current Brexit concerns placed pressure on the Pound. There were more challenges later in the day after another energy company fell victim to the energy problems that the UK is facing. All of this left investors concerned and forced the currency to tick lower. At the end of the day, the currency finished at 1.1918 against the Euro and 1.3397 against the US Dollar according to the Foreign Exchange Market.

 

It was a mixed day for the Euro as it took advantage of weak rivals although rising cases of Covid-19 and more lockdowns placed extra pressure on the economy and its recovery. There was more pressure for the single currency as consumer confidence dropped, putting a limit on the gains of the Euro.

The US Dollar had a wavering start to the day as markets waited on an announcement for the next chair of the Federal Reserve. As Jerome Powell was announced to stand for a second term, the Greenback made gains as US investors saw this as solid stability during a difficult period for the economy.

Tuesday 23rd November

On Tuesday, the Pound weakened as UK PMI indicated that high input costs caused problems for businesses while supply chain problems and staff shortages halted growth.

However, manufacturing and services data came in better than expected although this didn’t help to push the currency higher. There was a lack of support following comments from the Bank of England around inflationary pressures and that saw the currency finish at 1.1896 against the Euro and 1.3375 against the US Dollar according to the Foreign Exchange Market.

The Euro made some good gains in all areas on Tuesday as manufacturing and services PMIs increased, showing that the economy is growing and not shrinking. Despite this, surging Vodi-19 cases, as well as supply chain problems and increasing costs, mean that business confidence hit a ten-month low, preventing the single currency from making further gains.

The US Dollar stood firm yesterday as US Treasury yields firmed which helped to give support to the Greenback. The news of the reappointment of Jerome Powell as the Federal Reserve chair helped to secure expectations that rate hikes will take place in 2022, all of which help to strengthen the safe-haven currency.

Wednesday 24th November

On Tuesday, the Pound weakened as UK PMI indicated that high input costs caused problems for businesses while supply chain problems and staff shortages halted growth.

However, manufacturing and services data came in better than expected although this didn’t help to push the currency higher. There was a lack of support following comments from the Bank of England around inflationary pressures and that saw the currency finish at 1.1896 against the Euro and 1.3375 against the US Dollar according to the Foreign Exchange Market.

The Euro made some good gains in all areas on Tuesday as manufacturing and services PMIs increased, showing that the economy is growing and not shrinking. Despite this, surging Vodi-19 cases, as well as supply chain problems and increasing costs, mean that business confidence hit a ten-month low, preventing the single currency from making further gains.

The US Dollar stood firm yesterday as US Treasury yields firmed which helped to give support to the Greenback. The news of the reappointment of Jerome Powell as the Federal Reserve chair helped to secure expectations that rate hikes will take place in 2022, all of which help to strengthen the safe-haven currency.

Friday 26th November

Even Brexit tensions couldn’t stop the Pound from strengthening against many of its rivals on Friday. The announcement of a new Covid-19 variant caused many of the Pound’s peers to drop and that helped it to gain ground. The introduction of new restrictions over the weekend might mean that the currency will face some headwinds this week. However, at the end of trading on Friday, the Pound finished at 1.1788 against the Euro and 1.3342 against the US Dollar according to the Foreign Exchange Market.

The Euro strengthened at the end of the week as bets on a central bank rate hike were reduced as it reacted to news of the new Omicron variant. In recent weeks, the Euro has suffered at the hands of the strong stands the European Bank has taken its toll on the single currency. However, the negative correlation to the US Dollar also helped to boost the Euro.

It was a quiet day for the US Dollar, especially as Thanksgiving weekend meant that trading conditions were limited. The currency also reacted negatively to news that the Omicron variant could cause problems for the global recovery and could have an impact on the tightening of monetary policy, resulting in the Greenback dipping at the end of the week.

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