Friday September 1st – On the previous Friday, the British Pound (GBP) experienced fluctuations as market sentiment evolved throughout the day. With a growing sense of caution among traders, the Sterling, sensitive to risk, concluded the day on a defensive note.
The Euro (EUR) saw a turbulent day at the end of last week due to the absence of significant macroeconomic releases, leaving it exposed to market shifts. Additionally, uncertainty surrounding the European Central Bank’s (ECB) future actions hindered the EUR’s ability to make significant gains.
The US Dollar (USD) exhibited wide-ranging trading at the close of the previous week. Initially, USD exchange rates weakened in response to weak payroll figures and an increase in unemployment. However, the ‘Greenback’ swiftly rebounded, supported by stronger-than-expected ISM PMI data and expectations of Federal Reserve interest rate adjustments.
Thursday 31st August
Yesterday, the British Pound (GBP) declined following a speech by Bank of England (BoE) Chief Economist Huw Pill, which lacked clarity. While Pill reiterated the BoE’s commitment to combat inflation, his speech conveyed both hawkish and dovish elements, leaving investors seeking clearer signals and weighing on the Sterling.
The Euro (EUR) weakened on the same day, partly due to news of cooling core inflation in the Eurozone. Although headline inflation exceeded expectations, the mixed data added uncertainty to the European Central Bank (ECB)’s future interest rate decisions, shifting focus to the deteriorating economic conditions within the Eurozone.
The US Dollar (USD) strengthened against most major currencies as the core PCE price index confirmed a rise to 4.2% in July, the Federal Reserve’s preferred measure of inflation. This renewed speculation about further interest rate hikes, reinforced by a surprising drop in initial jobless claims, indicating ongoing labour market strength.
Wednesday 30th August
Despite the absence of significant economic data from the UK, the British Pound (GBP) rallied due to elevated risk appetite. Additionally, expectations of central bank policy divergence likely contributed to Sterling’s support, with the Bank of England (BoE) expected to continue raising interest rates while other central banks approach their peak rates.
Higher-than-expected German inflation figures buoyed the Euro (EUR) as markets bet on another rate hike by the European Central Bank (ECB). The Euro also benefited from its inverse relationship with a weakening US Dollar.
The US Dollar (USD) weakened against most major currencies following a surprising drop in the latest ADP employment figures. This decline, coupled with Tuesday’s JOLTs data indicating increased slack in the US labour market, reduced expectations of further Federal Reserve interest rate hikes, reflecting a slowing US economy.
Tuesday 29th August
Due to a lack of significant macroeconomic releases, the British Pound (GBP) could not capitalise on a positive market sentiment. However, the ongoing speculation about central bank policy divergence may have provided some support to the Sterling, with the Bank of England (BoE) expected to continue raising rates while other central banks approach their limits.
The Euro (EUR) faced downward pressure following an unexpected decline in German consumer confidence, preventing the single currency from gaining ground despite a weakening US Dollar, resulting in mixed trading.
The US Dollar (USD) struggled to gain support as the JOLTs job openings survey unexpectedly showed a decline in the number of job openings in July, indicating increased slack in the labour market. This development dampened expectations of Federal Reserve interest rate hikes.
Friday August 25th – The British Pound (GBP) edged up on Friday, recovering some ground after a challenging week. The increase appeared to stem from investors capitalising on the dip, with the Pound having reached oversold conditions.
The Euro (EUR) initially stumbled towards the end of the previous week due to Germany’s latest business climate indicator falling below expectations, indicating a significant drop in business confidence. Nevertheless, the EUR managed to regain some of its losses against riskier currencies as market sentiment deteriorated later in the session.
Despite an uncertain start, the US Dollar (USD) ultimately surged on Friday following bullish remarks from Federal Reserve Chair Jerome Powell. In his highly anticipated speech at Jackson Hole, Powell suggested that more interest rate hikes might be in store given persistently “high” inflation levels.
Thursday, August 24th
The Pound (GBP) encountered ongoing selling pressure yesterday following the most recent data from the Confederation of British Industry (CBI). The CBI’s distributive trades survey revealed that retail trade in the UK experienced its most rapid decline in two years this month, adding to growing concerns about the British economy’s health.
The Euro (EUR) had a mixed performance yesterday, rising against weaker counterparts due to a pessimistic market sentiment that lent support to the safer single currency. However, the EUR’s potential for gains was limited due to its negative correlation with a strengthening US Dollar (USD).
The US Dollar gained momentum yesterday as hawkish comments from a former Federal Reserve policymaker and a decrease in US jobless claims increased expectations of further tightening of monetary policy. A souring market mood also favoured the safe-haven ‘Greenback,’ although its gains were restrained as investors prepared for the speech by Fed Chair Jerome Powell.
Wednesday, August 23rd
Surprisingly weak private sector indicators plagued the Pound (GBP) yesterday, causing it to decline against major counterparts. Both the manufacturing and service sectors contracted in August, triggering additional concerns about a potential recession.
Following the release of the latest private sector indicators for the Eurozone, the Euro (EUR) weakened against most counterparts yesterday. While the bloc’s service sector activity slowed more than anticipated, inflationary pressures persisted. Consequently, expectations of an additional rate hike by the European Central Bank (ECB) helped cushion the EUR against more pronounced losses.
The US Dollar (USD) experienced variable trading yesterday as the latest PMIs pointed to a slowdown in economic activity. Furthermore, the market sentiment improved over the course of the session, capping the safe-haven ‘Greenback’ against certain counterparts.
Tuesday, August 22nd
The absence of UK economic data rendered the Pound (GBP) susceptible to losses yesterday, resulting in Sterling weakening against many peers. Amid the lack of data, concerns regarding the adverse effects of rising borrowing costs seemed to dampen the appeal of GBP.
The Euro (EUR) encountered selling pressure during yesterday’s session due to persistent worries about the dire state of Germany, the Eurozone’s largest economy. The safer single currency also suffered from a growing appetite for risk and its negative correlation with a recovering US Dollar (USD) in the afternoon.
Initially, a risk-positive mood in the markets diminished demand for the US Dollar yesterday. However, the ‘Greenback’ managed to rebound in the latter part of the session. Relatively hawkish statements from the Federal Reserve and robust US Treasury yields provided support to the American currency.
Monday, August 21st
The Pound (GBP) exhibited fluctuating movement without a clear trend yesterday as a lack of British economic data led the currency to trade sideways. Recent expectations of an interest rate hike by the Bank of England (BoE) might have provided some support for the Pound, while concerns about a recession exerted downward pressure.
The Euro (EUR) also underwent some volatility yesterday, although it managed to trend higher against certain counterparts. There was no evident catalyst for the upward movement, especially since German producer price inflation for July turned out lower than anticipated on Monday morning.
The safe-haven US Dollar (USD) experienced choppy trading yesterday as market sentiment wavered, with a slight improvement in risk appetite dampening the currency’s allure. Ultimately, a substantial increase in US Treasury yields upheld the modest support for the ‘Greenback.’
Friday August 18th – The British Pound (GBP) initially encountered selling pressure on the 18th of August after UK retail sales took a significant hit, dropping by 1.2% in July. This decline far exceeded expectations of a milder 0.5% contraction. Nevertheless, the Pound found support from anticipations of additional interest rate hikes by the Bank of England (BoE), which helped limit the extent of GBP’s losses.
The Euro (EUR) faced challenges on the same Friday as its value dipped due to its inverse relationship with the strengthening US Dollar (USD). This correlation exerted downward pressure on the single currency. The Eurozone’s final consumer price index failed to instigate notable movement, as the inflation data closely aligned with preliminary estimates.
Amid a souring market sentiment, the safe-haven US Dollar enjoyed broad gains during Friday’s trading session. Referred to as the ‘Greenback,’ the currency’s upward trajectory was somewhat constrained by a scarcity of substantial data releases and thin trading conditions, which restricted the extent of its movements.
Thursday August 17th
On the 17th of August, the British Pound (GBP) displayed upward momentum against most of its counterparts, bolstered by persistent expectations of higher interest rates from the Bank of England (BoE). Recent record-breaking wage growth and unexpectedly resilient core inflation figures contributed to the growing bets on further policy tightening by the British central bank.
The Euro (EUR) underwent a fluctuating trajectory on the same day, as the absence of impactful economic data from the Eurozone left the currency without a clear direction. While a marginal improvement in market sentiment potentially undermined the EUR against riskier currencies, its inverse relationship with a weakening US Dollar (USD) provided some cushioning.
Following a surge following the hawkish meeting minutes of the Federal Reserve on the previous Wednesday, the US Dollar surrendered some of its gains on Thursday. Increased risk appetite diminished the appeal of the safe-haven US Dollar. Later in the session, a drop in jobless claims allowed the USD to regain some lost ground.
Wednesday August 16th
The British Pound (GBP) demonstrated strength during the trading session on the 16th of August after higher-than-expected UK inflation data heightened expectations for additional interest rate increases by the Bank of England (BoE). Despite the anticipated easing of headline inflation in July, core inflation surprisingly held steady at 6.9%, rather than the projected drop to 6.8%. Additionally, service sector inflation experienced an upward tick.
The Euro (EUR) struggled to find a definitive direction on the same day, even in light of positive economic releases from the Eurozone. Industrial production in the bloc exceeded expectations, recording an unexpected growth of 0.5% in June. Simultaneously, the latest GDP estimate for the Eurozone confirmed a return to growth during the second quarter.
The US Dollar (USD) exhibited mixed performance on the same day as investors exercised caution prior to the release of minutes from the Federal Reserve’s recent policy meeting. Following the publication of the minutes, the ‘Greenback’ made gains as policymakers struck a moderately hawkish tone, suggesting the possibility of further US rate hikes.
Tuesday August 15th
The Pound (GBP) benefited from record-high average earnings data on the 15th of August, as wage growth exceeded predictions. This release prompted speculation about additional rate hikes by the Bank of England (BoE). However, the gains of the Sterling were curtailed by an unexpected rise in unemployment, which potentially signalled a slowdown in the labour market.
A surprise, albeit modest, improvement in the German ZEW economic sentiment index provided support to the Euro (EUR) on the same day. Nevertheless, concerns about an ongoing recession may have limited the extent of the Euro’s gains. While sentiment was less pessimistic, it remained predominantly negative.
Despite retail sales data surpassing expectations, the US Dollar (USD) struggled to capitalise on the positive news and traded with subdued movement on that day. The prevailing market sentiment was cautiously optimistic, preventing the safe-haven ‘Greenback’ from garnering substantial support.
Monday August 14th
The British Pound (GBP) displayed lacklustre performance on the 14th of August, attributed in part to the absence of noteworthy economic releases in the UK. Furthermore, being increasingly sensitive to risk sentiment, the tepid market mood further constrained the potential upside of the Sterling.
Given their inverse relationship, the Euro (EUR) weakened on the same day due to the strengthening of the US Dollar. While a certain degree of support was derived from risk-averse trading, it was insufficient to buoy the single currency significantly.
Amid prevailing risk-off sentiment, the safe-haven US Dollar (USD) gained strength on the 14th of August. Apprehensions regarding China’s economic recovery were further exacerbated by renewed concerns within the property sector. This prompted risk-averse trading, allowing the USD to strengthen despite the absence of substantial data releases
Friday 11th August – The Pound (GBP) showcased strength against a majority of its counterparts on Friday, propelled by the UK’s robust second-quarter GDP figures that exceeded expectations. The positive data ignited speculation that the Bank of England (BoE) might opt for additional interest rate hikes within the upcoming month.
On Friday, the Euro (EUR) experienced fluctuations due to a limited data calendar, which hindered the common currency’s ability to rally support. Although some gains were derived from risk-averse trading, they remained insufficient to establish a clear trajectory for the Euro’s performance.
In the aftermath of hotter-than-anticipated Producer Price Index (PPI) data, the US Dollar (USD) advanced last Friday, with investors rekindling their expectations for further tightening measures. Nevertheless, the ‘Greenback’ struggled to solidify these gains following a dip in the Michigan Consumer Confidence Index.
Thursday August 10th
The Pound (GBP) faced a day of moderate trading activity on Thursday, marked by a lack of data preventing Sterling from fully capitalising on a mildly bullish market. Moreover, domestic economic uncertainty acted as a dampener on GBP rates. Housing prices were revealed to have descended to a 14-year nadir, attributed to the ongoing impact of elevated interest rates on the economy.
During Thursday’s European session, the Euro (EUR) experienced upward movement, driven by its inverse relationship with the US Dollar (USD). While USD exchange rates managed to rebound later in the day, the Euro maintained a substantial portion of its strength due to prevailing risk-off market sentiment.
The US Dollar (USD) exhibited considerable fluctuations throughout the preceding day. Initially, USD exchange rates dipped following lower-than-anticipated US inflation data. However, as market sentiment turned sour, the ‘Greenback’ managed to regain ground through safe-haven flows. Additionally, US Treasury yields rebounded from their weekly lows, offering further support.
Wednesday August 9th
The Pound (GBP) encountered setbacks on Wednesday in response to pessimistic economic projections from the National Institute of Economic and Social Research. The think tank’s warning of five years of ‘growth stagnation’ for the UK and the looming possibility of a recession in 2024 exerted downward pressure on GBP.
The Euro (EUR) displayed fluctuations throughout the day, primarily influenced by its inverse correlation with the US Dollar (USD). Despite limited data releases, the common currency managed to strengthen toward the end of the European session as the ‘Greenback’ weakened.
Dovish commentary from Federal Reserve policymaker Patrick Harker continued to weigh on the US Dollar’s performance on the prior day. Nonetheless, the ‘Greenback’ found some support amid the uncertainty following reports of deflation in China the previous month.
Tuesday August 8th
The Pound (GBP) experienced fluctuations on Tuesday due to discouraging retail sector data from the UK. While risk-averse trading impacted some currencies negatively, resulting in GBP gaining strength against them, the bleak outlook for this vital sector curbed overall market sentiment.
Euro (EUR) trading activity was varied on the same day. The common currency managed to advance against riskier assets, but its performance remained muted against the US Dollar (USD). The worsening market mood provided a measure of support to the EUR, but the absence of impactful data limited additional impetus.
Safe-haven demand bolstered the US Dollar (USD) on Tuesday, as a gloomy market sentiment influenced trading dynamics. However, remarks from Federal Reserve officials may have tempered the extent of this strength, with the consensus being that future policy decisions would predominantly hinge on data trends.
Monday August 7th
Speculation regarding additional tightening measures by the Bank of England (BoE) propelled the Pound (GBP) against certain counterparts on the preceding day. The persistent inflationary pressures within the UK have instilled confidence among GBP investors that the BoE will implement at least one more interest rate hike, notwithstanding the dovish tone observed after last week’s rate decision.
The Euro (EUR) encountered mixed trading on Monday, characterised by a turbulent yet relatively subdued market session. While the safer Euro managed to make gains during segments of bearish trading, a significant drop in German industrial production limited the currency’s overall strength.
Trading involving the US Dollar (USD) displayed a blend of outcomes, largely influenced by the absence of impactful data that left the safe-haven ‘Greenback’ in a state of flux. Following the release of last week’s payroll figures, analysts speculate that the Federal Reserve is likely to pause its ongoing tightening cycle, contributing to the USD’s inability to establish a significant advantage over its counterparts.
Friday 4th August
The Pound (GBP) remained entrenched in a volatile environment on Friday, as the aftermath of the recent Bank of England (BoE) interest rate decision continued to reverberate through the markets. Despite the potential for future tightening, the bleak economic projections that accompanied the decision cast a shadow of uncertainty. This has led to the assessment that the UK finds itself ensnared in a ‘low-growth trap,’ exerting downward pressure on the sentiment surrounding the Sterling.
After a hesitant start last Friday, the Euro (EUR) gradually asserted its strength against the majority of its primary counterparts as the trading session progressed. While retail sales in the Eurozone exhibited a contraction of 0.3%, falling short of the anticipated 0.2% increase, this negative data was seemingly counterbalanced by an unexpected surge in German factory orders. Moreover, the softness of the US Dollar likely contributed supplementary tailwinds to the Euro’s gains.
In the wake of the release of the latest non-farm payrolls data, the US Dollar (USD) experienced a significant decline during the course of Friday’s trading session. The disappointing payroll figures prompted investors to scale back their expectations of future rate hikes by the Federal Reserve, thereby exerting downward pressure on the USD.
Thursday 3rd August
The Pound (GBP) experienced a weakening trend yesterday, triggered by the Bank of England’s (BoE) interest rate decision. As anticipated, the central bank raised interest rates by 25bps; however, accompanying statements suggested a possible conclusion to the hiking cycle, dampening Sterling’s performance.
Similarly, the Euro (EUR) mainly traded sideways due to a significant drop in producer price inflation, which lowered expectations of a rate rise by the European Central Bank (ECB). Nevertheless, the Euro found some support amid a risk-off sentiment prevailing in the market.
The US Dollar (USD) also displayed fluctuations yesterday as the US services sector experienced a larger-than-expected slowdown, causing uncertainty among investors. Despite this, the safe-haven status of the US Dollar offered some support amidst prevailing market anxiety.
Wednesday 2nd August
The Pound (GBP) faced a setback yesterday as a lack of British economic data left it vulnerable to the prevailing risk-off market mood. The absence of aggressive bets on the Pound resulted in subdued exchange rates before the Bank of England’s (BoE) interest rate decision scheduled for today.
In contrast, the Euro (EUR) performed relatively well on the same day, benefiting from its safe-haven status during a bearish market sentiment. However, the single currency’s gains were limited by its negative correlation with a stronger US Dollar.
The US Dollar (USD) started the trading session with strength on Wednesday as a risk-off sentiment emerged following the US government’s credit downgrade. Safe-haven flows bolstered the ‘Greenback,’ and it further gained momentum in the afternoon due to stronger-than-expected jobs data, boosting Federal Reserve rate hike speculations.
Tuesday 1st August
The Pound (GBP) traded with lacklustre movement yesterday, weighed down by growing economic concerns despite expectations of a Bank of England (BoE) interest rate decision. The final manufacturing index confirmed a sharp slowdown in activity, raising worries about the UK’s economic outlook.
Although German unemployment levels surprisingly fell, the Euro (EUR) only experienced marginal gains on Tuesday. The Eurozone’s largest economy witnessed a decline in the unemployment rate to 5.6%, with fewer workers unemployed than in the previous month. However, this wasn’t sufficient to convince EUR investors that the European Central Bank (ECB) would continue raising interest rates.
Tuesday’s sombre market mood resulted in safe-haven flows to the US Dollar (USD), leading to its appreciation against most peers. Downbeat economic data, including a fall in JOLTs job openings for June, dampened risk appetite, maintaining a bearish trading atmosphere.
Monday 31st July
The Pound (GBP) traded with limited direction on Monday as the scarcity of economic data left investors pondering the UK’s economic condition. Expectations of further tightening measures from the Bank of England (BoE) provided some support for Sterling. However, the prospect of additional measures also raised concerns about the impact on the already fragile UK economy.
Despite positive inflation and GDP data, the Euro (EUR) struggled to gain substantial support after an initial surge on Monday. While headline inflation declined to 5.3% and the economy expanded by 0.3% in Q2, core inflation remained at 5.5%, leading to doubts about the European Central Bank (ECB) continuing its rate hike path.
Monday’s upbeat market sentiment weighed on the safe-haven US Dollar (USD), causing it to weaken against most other currencies. However, the lack of impactful economic data for the USD prevented a significant recovery.
Currency Ranges for the month:
GBP/USD: Low: 1.25514 High: 1.27954
GBP/EUR: Low: 1.15371 High: 1.17583
EUR/USD: Low: 1.07692 High: 1.104