Weekly Report – 25th April to 29th April 2022

Friday 29th April -The Pound strengthened during the session as European investors took a risk-on mood which helps to give the currency a much-needed boost. However, many of these gains were lost on Monday following a quick crash in European trade.

 

It was a mixed day for the Euro as it lost ground following some disappointing data. During the first quarter of this year, GDP growth in the Eurozone dipped while inflation rose, underpinning fears that the Eurozone economy will suffer. Despite this, the single currency managed to gain some ground against many peers during the afternoon.

At the start of the session, the US Dollar dipped following some profit-taking while a risk-on mood meant that demand also dropped. However, in the afternoon, the Greenback mounted a recovery following news that personal spending and income were better than expected. Despite this, the core PCE price index eased and that put a cap on any gains.

Thursday 28th April

The Pound started the day moving upwards as an upbeat market mood helped to bolster the currency. Despite this, economic news meant that the Pound quickly took a downwards turn. New data was released by the Insolvency Service that showed the company insolvencies reached a ten-year high during Q1 of this year.

The Euro strengthened against many of its peers during the session as an upbeat market mood provided support for the single currency. Furthermore, the German flash inflation rate moved up to 7.4% from 7.3% which meant that it came in higher than expected.

At the beginning of the European session, the US Dollar dipped although it did recover, moving upwards and eventually reaching multi-year highs against the Euro and the Pound. Even a contraction in the US economy couldn’t hold the safe-haven currency back.

Wednesday 27th April

The Pound experienced a mixed day of trading although it did gain some support following some dip-buying. Despite an improvement in market mood, the drop in the Confederation of British Industry’s distributive trades balance meant that the mood was capped and that placed the currency on an uncertain path.

The Euro lost ground following the German GfK consumer climate indicator showing a drop to the lowest levels ever seen. Adding to this was the news that the Russian gas giant Gazprom cut supplies to both Bulgaria and Poland as both countries failed to pay for their contracts in Roubles.

The US Dollar inched higher during the session after a rise in US Treasury yields helped to provide support for the Greenback. Despite this, there was a lack of US economic data while an improvement in risk appetite meant that any gains were capped.

Tuesday 26th April

The Pound fell back following after markets pulled back on Bank of England rate hike bets as a result of the cost-of-living crisis in the UK. Disappointing economic data at the end of last week has forced economists to believe that the Bank of England will take a cautious stance. Along with this, UK Government bond yields have also dropped sharply and that has weighed on the Pound.

The Euro experienced a mixed day of trading as there was a lack of economic data giving it any direction. Along with this, the negative correlation with the US Dollar also meant that the single currency was not able to make any significant gains.

Hawkish expectations from the Federal Reserve helped to support the US Dollar, allowing it to firm during trading. In addition, Us Durable goods orders have improved and that also helped to support the Greenback even if the data did fall below expectations.

Monday 25th April

The Pound lost ground yesterday after the currency struggled at the mercy of the ongoing cost-of-living crisis. After the release of disappointing retail sales figures on Friday and news that 25% of adults had reported that they struggled to pay their bills, the currency faced headwinds and struggled throughout trading.

The Euro weakened against a number of its peers following the release of disappointing data. While the Ifo business climate index in Germany increased unexpectedly it still remains close to a 14-month low. Additionally, the ongoing Ukraine invasion still places pressure on the single currency and that means that the Eurozone is at risk of facing problems.

It was a contrasting day for the US Dollar which managed to strengthen on the back of concerns that China and Covid-19 could impact markets. As China implements further restrictions to deal with rising cases, markets are concerned that this could also have an impact on the global economy which helped to give the Greenback a boost.

Currency Ranges for the week:

GBP/USD: Low: 1.25732 High: 1.2721

GBP/EUR: Low: 1.18121  High: 1.19273

EUR/USD: Low: 1.04868  High: 1.06921

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