Weekly Market Report: 27th – 1st October 2021

Monday 27th September -The Pound strengthened during trading on Monday as it gathered momentum following the policy decision from the Bank of England.

This led analysts to expect a rate rise in early 2022, giving the currency a boost. The gains were held into the afternoon following further hawkish comments from the BoE governor, who indicated again that the interest rate could rise soon. As a result, according to the Foreign Exchange Market the Pound finished at 1.1716 against the Euro and 1.3702.

 

It was a difficult day for the Euro as a lack of data meant that it had very little direction. Dovish comments from the European Central Bank placed pressure on the currency as the President announced that inflationary pressures are temporary currently.

The US Dollar had a mixed day yesterday as the market mood changed, leaving the safe-haven currency struggling slightly. While the currency firmed during the start of the day, the durable goods orders data came in better than expected and that helped to boost global markets and put a dent in the US dollar.

Tuesday 28th September

Tuesday saw the Pound reach a new two-month low against the Euro and an eight-month low against the US Dollar.

This saw it finish the day at 1.1585 against the Euro and 1.3538 against the US Dollar according to the Foreign Exchange Market. There are concerns that the economy will be impacted widely by the current supply chain issues and the fuel shortage, all of which will contribute to the rising inflation.

The Euro lost some ground to the US Dollar yesterday although it did make gains against many of its other rivals after German consumer confidence came in better than expected. The consumer climate indicator for October increased from -1.1 to 0.3, reaching the best score since the pandemic arrived in 2020, as it was expected to drop to -1.6.

The US Dollar strengthened yesterday, as a risk-off market mood meant that the safe-haven currency experienced an increase in demand. This change in mood came following warnings that the energy crisis taking hold in Europe could have an impact on the rest of the world.

Wednesday 29th September

It was another challenging day for the Pound on Wednesday as it still continued to lose ground against many of its major rivals yesterday.

This fall continued as a result of economic concerns even though the fuel crisis is showing signs of slowing down. However, the energy crisis is still causing energy companies to collapse and that put a dent in the currency. As a result, it finished at 1.1579 against the Euro and 1.3429 against the US Dollar according to the Foreign Exchange Market.

The Euro dropped against the US Dollar, reaching a 14-month low although it did make gains against the majority of its peers following a rise in economic sentiment across the Bloc. However, any gains might have been limited by the dovish stance taken by the European Central Bank although a drop in unemployment figures today could help to bolster the single currency.

The US Dollar continued on an upward trajectory yesterday as demand for the safe-haven currency was fuelled by global economic concerns. As Europe and China are both in the midst of an energy crisis, this increased the likelihood of a debt default by the US and that resulted in markets taking on a nervous stance.

Thursday 30th September

The Pound experienced a slight recovery on Thursday as it reacted to news that the UK fuel crisis is stabilising slightly.

Despite making gains, these were limited after the supply crisis is still causing concerns for investors as they fear it will bring a halt to the economic recovery in the UK. This left the currency at 1.164 against the Euro and 1.348 against the US Dollar according to the Foreign Exchange Market.

The Euro lost some ground yesterday after the European energy crisis weighed heavily on the single currency. The German inflation rate couldn’t provide support for the currency even though it reached a 28-year high of 4.1% while the European Central Bank is still refusing to budge when it comes to tightening monetary policy.

The US Dollar also struggled against many of its peers during trading yesterday although it still remained close to the new multi-month highs. This slight drop came after a change in market mood after investors looked elsewhere, putting a dent in demand for the Greenback. There are several data releases out today and these are likely to influence the US Dollar.

Friday 1st October

On Friday, the Pound strengthened against many of its rivals even though the ongoing supply chain crisis still had the potential to cause problems.

However, the currency saw some solid gains as the UK’s manufacturing PMI was revised higher, going from 56.3 to 57.1 giving the Pound the chance to make up for some of the ground it had lost earlier in the week. As a result, as trading closed the Pound came in at 1.169 against the Euro and 1.357 against the US Dollar according to the Foreign Exchange Market.

The Euro lost some of its gains against the majority of its peers on Friday following a new 13-year high inflation figure of 3.4%. Adding to this is the dovish stance of the European Central Bank which is causing investors to remain concerned about a policy mistake. Furthermore, there was pressure from the manufacturing PMIs which came in lower than the August Figure.

At the end of the week, the US Dollar weakened slightly as a bullish market sentiment meant that the currency lost a lot of its appeal. The release of positive data in the form of ISM manufacturing PMI and personal income and spending meant that support was lacking on Friday.

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