Weekly Report – 4th July to 8th July 2022

Friday 1st July – It was a volatile day for the Pound as it lost ground against a number of peers following Boris Johnson’s resignation. There was some support for the currency from an upbeat mood although traders did seem concerned about the future of the economy in the UK.

 

There was a sharp drop in the Euro as it grappled with a negative correlation with the US Dollar. The European Central Bank did make some comments that eased concerns and helped to limit any losses, however, it was not enough as the single currency struggled through the day.

The US Dollar moved upwards at the start of trading as aggressive rate rises helped to give the currency a boost. Despite this, the safe-haven currency did suffer as a result of an improved market mood. Improved US jobs data wasn’t enough to support the currency as that added to an increased appetite for risk.

Thursday 7th July – The Pound found support as it Prime Minister Boris Johnson announced his resignation. Following months of uncertainty, investors are now focused on seeing how the economy can ride out the ongoing crisis.

There were further losses for the Euro and this was down to concerns that Russia could cut gas supplies this winter which would lead to significant economic problems. Disappointing meeting minutes from the European Central Bank failed to support the single currency but it did become clear that a 50-bp rate rise was supported.

It was a similar day for the US Dollar as it edged lower as a result of an upbeat market mood. However, concerns of an impending global recession did help to cap any losses.

Wednesday 6th July – The ongoing political crisis in the UK left the Pound exposed following a number of resignations, leaving experts to predict that Boris Johnson would soon resign. As a result, the uncertainty dented support which meant that the Pound fluctuated.

It was a disappointing day for the Euro as the sell-off continued, seeing the currency reach a new two-decade low against the US Dollar. Further pressure was placed on the Euro as the US Dollar strengthened and the negative correlation hampered the single currency.

The US Dollar continued on its strong run although markets prepared for the meeting minutes from the Federal Open Market committee meeting. The minutes indicated that the Central bank will continue to tighten but the safe-haven currency did easy following the release and this was down to improvements in risk-appetite.

Tuesday 5th July – At the start of trading, the Pound did rise against a number of weaker rivals as the UK’s final services PMI showed improvements. Despite this, following the release of the Financial Stability Report from the Bank of England the currency slumped. The report indicated that the economic outlook in the UK had deteriorated and that the financial system faced serious risks.

The Euro slumped to new lows against the US Dollar as concerns of a recession continued to weigh heavily on the single currency. It did manage to make up for some of these losses although this was not enough to make a recovery.

The US Dollar Index reached a new 20-year high which meant that the currency soared. This came as fears of a global recession meant that investors took an interest in the safe-haven currency.

Monday 4th July – An upbeat mood helped to support the Pound and that helped it to firm against many rivals. Despite this, it did shed some of these gains as investors remained concerned about the UK economy.

The Euro struggled as it reacted to European gas prices reaching a four-month high. Investors are concerned that Europe is close to going into a recession and that meant that the single currency struggled throughout the day.

It was a slow start for the US Dollar as it dipped before making a recovery as it moved sidewards as a result of slim trading conditions. Furthermore, the American markets were also closed for independence day.

Currency Ranges for the week:

GBP/USD: Low: 1.18806 High: 1.21597

GBP/EUR: Low: 1.15985  High: 1.18412

EUR/USD: Low: 1.0084  High: 1.046

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