Weekly Report – 11th July to 15th July 2022

Friday 15th July – The Pound dropped against a number of its peers as it reacted to political uncertainty regarding the leadership contest, all of which placed pressure on the currency. Furthermore, data suggested that company insolvencies increased by 40%, highlighting the problems that the economy is facing.

 

There were some positive moves for the Euro as it made up ground against the Pound and US Dollar although its success stopped there. This came as a result of the negative correlation with the US Dollar which weakened. Furthermore, European markets improved and that helped to bolster the appeal of the single currency.

The US Dollar slipped back and even strong retail sales couldn’t help to boost the currency. The downside was a result of the Federal Reserve pushing back on the expectations of a rate hike of 100-bp.

Thursday 14th July 

It was a mixed day for the Pound as there was a lack of economic data to push it in either direction and so, it was influenced by the way in which other currencies moved. The ongoing political uncertainty also weighed on the currency as the Conservative Party continued its search for a new leader.

It was a different story for the Euro as it managed to make gains against a number of weaker peers. Movements in other currencies seemed to be the driving force behind the initial gains although a drop in gas and oil prices helped to ease the pressure.

The US Dollar gathered momentum as Federal Reserve rate rise bets were fuelled by a high inflation rate reading. Along with this, there was a risk-off mood that meant that the safe haven currency became more appealing

Wednesday 13th July

It was a solid start for the Pound as it increased following the release of the latest GDP figures which indicated that there was strong growth in May. Despite this, the gains were soon lost as the currency suffered due to the political uncertainty in the UK.

It was a day of ups and downs for the Euro as the single currency initially rose as a result of strong industrial production figures. However, the US Dollar spiked and that forced the EUR/USD exchange down but this was short-lived as a change in the US Dollar meant that the single currency made a recovery.

The US Dollar moved in a broad range after the release of the latest US inflation figures. US inflation increased to 9.1% in June and that caused the US Dollar to spike although it did see a correction at the end of the European trading session.

Tuesday 12th July

The Pound fell back against a number of peers as the ongoing political uncertainty continued to weigh on the currency. Furthermore, a downbeat market mood also placed pressure on the Pound.

It was a difficult start for the Euro as exchange rates struggled after the release of the latest ZEW index in Germany. This highlighted a significant drop in economic sentiment and that caused problems for the single currency.

The US Dollar moved slightly higher as the safe-haven currency benefited from a risk-averse mood. Despite this, the gains were soon lost as Us Treasury yields shrunk.

Monday 11th July

There was no strong driver for the Pound during trading and political uncertainty continued to leave investors in a nervous position. There was also a downbeat market mood that caused problems for the currency.

The Euro had a tough start to the week as a result of the negative correlation with the US Dollar which saw it lose strength. Along with this, the recent cut to Russian gas exports also put extra pressure on the single currency.

It was a solid start for the US Dollar which was boosted by Federal Reserve rate hike bets following the release of strong US payroll figures. The Greenback was also boosted by news of a rise in Covid cases in China which could mean another lockdown could be implemented.

Currency Ranges for the week:

GBP/USD: Low: 1.17665 High: 1.19697

GBP/EUR: Low: 1.17537  High: 1.18881

EUR/USD: Low: 0.0995552  High: 1.01157

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