Friday 30th June – The Pound (GBP) soared at the week’s end. UK GDP confirmed the country’s winter recession avoidance, pleasing GBP investors. Sterling gained further momentum as the session progressed, benefitting from an improved market sentiment that boosted the currency’s sensitivity to risk.
The Euro (EUR) initially weakened due to a risk-on sentiment and below-expected inflation data on Friday. However, EUR found support later in the day, as the US Dollar (USD), with which the Euro has a negative correlation, experienced a sharp decline.
There was significant pressure on the US Dollar on Friday when the core PCE price index, the Federal Reserve’s preferred inflation measure, unexpectedly cooled. This led to a decrease in expectations for further Fed rate hikes, triggering a sell-off in the US Dollar.
Thursday 29th June
The Pound faced challenges with limited data availability, making the UK currency susceptible to domestic headwinds. Concerns over the increasingly bleak outlook for the UK weighed on GBP. The anticipated collapse of Thames Water shook investors, raising questions about other heavily indebted suppliers.
Initially, the Euro edged higher following hawkish comments from the European Central Bank (ECB) earlier in the week. However, the Euro’s negative relationship with the rallying US Dollar hindered its progress. Even a stronger-than-expected increase in German inflation failed to uplift the Euro.
After a weak start, the US Dollar surged higher on Thursday afternoon. The final US GDP growth rate for the first quarter was significantly revised upwards, and jobless claims came in below forecasts. These releases boosted expectations for Federal Reserve rate hikes, sparking a rally in the US Dollar.
Wednesday 28th June
There was a decline in the Pound on Wednesday as the UK’s economic outlook worsened due to the deepening cost-of-living crisis. Concerns about a potential 40% increase in water bills over the coming years troubled GBP investors, alongside news of the possible collapse of utility firm Thames Water.
The Euro managed to gain ground against weaker rivals, supported by hawkish remarks from European Central Bank (ECB) President Christine Lagarde. However, the single currency’s gains were limited by downbeat German consumer confidence data. The resurgent US Dollar also posed challenges for the Euro due to their negative correlation.
The US Dollar rallied due to a souring market sentiment and hawkish signals from the Federal Reserve, driving renewed interest in the safe-haven currency. US-China trade tensions and a decline in Chinese industrial profits dampened risk appetite. Additionally, Fed Chair Jerome Powell stated that a ‘strong majority’ of policymakers foresee two or more rate hikes by the end of the year.
Tuesday 27th June
The Pound experienced mixed movement, finding some success amid an improving market sentiment. However, concerns about the UK economy and the possibility of a recession due to rising interest rates limited the currency’s upside potential.
The Euro strengthened during Tuesday’s trade as the European Central Bank’s (ECB) Sintra Forum began with hawkish speeches from ECB policymakers. Particularly noteworthy was a speech by ECB President Christine Lagarde, indicating further monetary tightening and pushing back against rate cut expectations.
The US Dollar faced pressure as Chinese state banks started selling USD reserves to bolster the Yuan (CNY). Positive US data helped mitigate the USD’s losses, with durable goods orders unexpectedly expanding and consumer confidence surpassing expectations.
Monday 26th June
The Pound initially rose as bets on Bank of England (BoE) interest rate hikes bolstered the UK currency. However, Sterling dropped later in the session following an unexpected decline in sales volumes, as reported by the Confederation of British Industry’s (CBI) distributive trades survey.
There was a fluctuation in the Euro, declining at the start of the session due to a larger-than-forecast decrease in German business sentiment. As the session progressed, the single currency recovered some ground but remained cautious ahead of a speech by European Central Bank (ECB) President Christine Lagarde.
The safe-haven US Dollar had a subdued day, trading within a narrow range and struggling to make gains despite the bearish sentiment in the markets. Limited data and uncertain movements in US Treasury yields subdued the strength of the ‘Greenback’.
Friday 23rd June – Economic data of mixed nature caused significant fluctuations in the Pound (GBP) during the last session of the previous week. While British retail sales showed unexpected growth last month, the manufacturing and services PMIs fell short of expectations.
The Euro (EUR) faced downward pressure on Friday due to disappointing PMI data. Manufacturing activity contracted at its sharpest pace in three years, while service sector activity slowed more than anticipated, reaching a five-month low.
As a safe-haven currency, the US Dollar (USD) strengthened on Friday, benefiting from market risk aversion. Weak economic data from major economies worldwide, coupled with concerns about rising interest rates, dampened market sentiment.
Thursday 22nd June
The Bank of England’s (BoE) decision to raise interest rates by 50 basis points yesterday rattled the Pound (GBP), as investors expressed concerns that further monetary tightening could push the UK economy into recession. While Sterling experienced gains against weaker currencies, it faced challenges elsewhere.
Yesterday, the Euro (EUR) declined against many counterparts due to a stronger US Dollar (USD) and concerns regarding Russia-Ukraine tensions. However, the Euro managed to edge higher against riskier currencies, thanks to a prevailing pessimistic market sentiment.
The US Dollar advanced during yesterday’s session as anxious investors sought refuge in the safe-haven currency. With central banks worldwide raising interest rates, fears grew about the potential impact of higher borrowing costs on the global economy.
Wednesday 21st June
The Pound (GBP) exhibited notable volatility yesterday, surging and then plummeting after the UK’s consumer price index surpassed forecasts. Of particular surprise was core inflation, which reached a 31-year high. While this prompted speculation of a 50-basis-point hike by the Bank of England (BoE), it also raised concerns that the BoE might need to push the UK into a recession to control persistent inflationary pressures.
Yesterday, the Euro (EUR) received continued support from recent hawkish comments made by European Central Bank (ECB) rate setters. Multiple policymakers have signalled a further tightening stance from the ECB. However, the lack of significant Eurozone data may have limited the currency’s movements.
The safe-haven US Dollar (USD) experienced mixed performance yesterday, gaining ground against some weaker counterparts in a lukewarm market environment. Additionally, uncertainty prevailed as markets tried to gauge the Federal Reserve’s potential monetary policy path following the recent pause in rate hikes. Testimony from Fed Chair Jerome Powell to the US Senate created some hesitancy among USD bulls.
Tuesday 20th June
The Pound (GBP) stumbled against several currencies yesterday as a gloomy market sentiment exerted pressure on the increasingly risk-sensitive UK currency. Speculation surrounding the Bank of England’s (BoE) interest rate decision provided some support, with markets anticipating a hawkish announcement.
The US Dollar (USD) gained strength yesterday as worsening market sentiment led investors to favour the safe-haven “Greenback.” Concerns over a global economic growth slowdown weighed on investor risk appetite.
The Euro (EUR) achieved some gains yesterday, moving higher against riskier currencies due to the prevailing negative risk sentiment. However, the contraction in German PPI limited the upside potential for the Euro, as it indicated easing inflation and reduced pressure on the European Central Bank (ECB) to continue raising interest rates.
Monday 19th June
The Pound (GBP) started the week on a strong note as GBP investors prepared for the Bank of England’s (BoE) latest interest rate decision. The GBP/EUR exchange rate reached a nine-month high, fueled by talks of a possible 50-basis-point rate hike from the BoE.
The Euro (EUR) experienced limited movement on Monday, with no notable data releases impacting the currency. This subdued performance occurred despite European Central Bank (ECB) policymaker Peter Kazimir’s suggestion that another rate hike in July is highly likely.
The US Dollar (USD) saw a slight increase yesterday as concerns about China’s economic outlook weighed on market sentiment and bolstered demand for safe-haven assets. However, thin trading conditions persisted in the US Dollar as US markets were closed for the Juneteenth Federal holiday.
Friday 16th June– The Pound (GBP) concluded the week on a positive note, fueled by optimistic expectations of a Bank of England (BoE) interest rate hike, thereby boosting the UK currency. This strength followed a week of hawkish indications from central banks in Europe and the United States, along with encouraging data from the UK, including declining unemployment, increasing wage growth, and a recovering British economy.
Initially, the Euro (EUR) experienced a surge on Friday, benefiting from tailwinds resulting from the European Central Bank’s (ECB) recent rate hike. However, the Euro later stumbled due to its negative correlation with the US Dollar (USD) in the afternoon. Additionally, a risk-on sentiment weighed on the safer Euro while bolstering its riskier counterparts.
The start of Friday’s trading witnessed a softening of the safe-haven US Dollar (USD) as market sentiment turned positive. However, the USD managed to regain some ground in the afternoon as the University of Michigan’s latest consumer sentiment index exceeded expectations, reaching a four-month high.
Thursday 15th June
The Pound (GBP) maintained its strength yesterday, supported by expectations of further monetary tightening by the Bank of England (BoE). However, limited UK data led to mixed movements, with the GBP reaching a new one-year high against the US Dollar (USD) while facing slight weakness against some stronger currencies.
The Euro (EUR) strengthened following a hawkish rate hike by the European Central Bank (ECB). As anticipated, the ECB raised rates by 25 basis points and indicated the likelihood of additional increases in the coming months.
The US Dollar (USD) experienced a decline yesterday as market participants reduced their expectations for further interest rate hikes by the Federal Reserve. Despite the Fed signalling the possibility of more rate increases after its policy pause, higher-than-anticipated jobless claims figures had a negative impact on Fed rate hike expectations on Thursday afternoon.
Wednesday 14th June
A recovery in the UK economy provided a boost to the British Pound yesterday. April’s UK GDP expanded by 0.2%, rebounding from a 0.3% contraction in March. This positive data further fueled expectations of additional monetary tightening by the Bank of England (BoE), contributing to the gains in Sterling.
The Euro (EUR) experienced some success as better-than-expected Eurozone industrial production figures lifted the currency. However, the relatively safer Euro weakened against riskier currencies due to a prevailing risk-on sentiment in the market.
The US Dollar (USD) initially declined yesterday, hitting a one-year low against the British Pound (GBP), as expectations of a Federal Reserve policy pause deterred potential USD investors.
In the evening, the US Dollar regained some ground. Although the Fed left rates unchanged, it indicated that it was not finished with tightening its policy. The central bank even revised its terminal rate projection upward to 5.6% from 5.1% in March.
Tuesday 13th June
The Pound (GBP) strengthened against most major currencies yesterday, driven by a series of labour data surpassing expectations. Wage growth, in particular, provided a boost to Sterling, with the Bank of England (BoE) considering it a key factor for inflationary pressures. The April increase in wages supported the likelihood of additional tightening measures in the near future.
Investors continued to support the Euro (EUR) yesterday, as expectations of an interest rate hike by the European Central Bank (ECB) remained strong. Furthermore, an improvement in the German economic sentiment index provided additional support, although the index remained in negative territory.
Investors now anticipate the Federal Reserve to pause its tightening cycle, which weakened the US Dollar (USD) during Tuesday’s trading session. Both core and headline inflation moderated, with monthly core inflation data remaining unchanged. As a result, investors believe the Fed will halt its current tightening measures.
Monday 12th June
Profit-taking resulted in a decline of the British Pound (GBP) yesterday, causing it to retreat from monthly highs against several major currencies. Comments from Bank of England (BoE) policymaker Jonathan Haskel, suggesting the potential need for further interest rate hikes, did little to support GBP.
The Euro (EUR) strengthened yesterday on expectations of further tightening by the European Central Bank (ECB) ahead of its upcoming decision on Wednesday. While the path beyond this decision remains uncertain, the perceived certainty of a 25 basis point hike has buoyed the common currency.
Perceptions of a dovish shift in the Federal Reserve weighed on the US Dollar (USD) yesterday, along with a positive market sentiment. Economists’ expectations of a pause in the Fed’s current rate hike cycle prompted investors to seek immediate returns. Moreover, the prospect of a pause boosted market confidence, adding further pressure on the safe-haven currency.
Friday 9th June– The Pound (GBP) strengthened during Friday’s trading session, driven by growing expectations of interest rate increases from the Bank of England (BoE). With UK inflation on the rise and the British economy displaying resilience, investors are speculating that the BoE might raise rates as high as 5.5%, surpassing the current 4.5% level.
On the other hand, the Euro (EUR) faced a decline on Friday following dovish remarks from Francois Villeroy de Galhau, a policymaker at the European Central Bank (ECB). Villeroy de Galhau expressed his belief that inflation would significantly slow down, which dampened expectations ahead of the ECB’s upcoming monetary policy meeting.
Friday saw a decline in the US Dollar (USD) as investors speculated on a pause in the Federal Reserve’s rate hiking cycle, expected to be discussed at the bank’s meeting later in the week. Additionally, an improvement in market sentiment exerted downward pressure on the safe-haven status of the ‘Greenback’.
Thursday 8th June
Yesterday, the Pound (GBP) experienced a positive trend, bolstered by expectations of further interest rate hikes from the Bank of England (BoE). Recent assessments indicating a better-than-anticipated UK economic outlook and persistent high inflation have led investors to factor in multiple additional rate hikes by the BoE.
Although the Euro (EUR) initially faced pressure on Thursday due to the Eurozone slipping into a recession at the beginning of the year, the currency managed to stay afloat against weaker counterparts, primarily supported by its negative correlation with the US Dollar. As a result, losses were limited in other currency pairs.
During yesterday’s trading session, the US Dollar (USD) stumbled as expectations of a policy pause from the Federal Reserve weighed on the demand for USD. In the afternoon, unexpectedly high US jobless claims, marking the largest increase since October 2022, further contributed to the pressure on the ‘Greenback’.
Wednesday 7th June
Despite relatively thin trading conditions, the Pound (GBP) managed to gain ground on Wednesday. The currency’s strength may be attributed to renewed bets on rate hikes by the Bank of England (BoE), with investors continuing to price in multiple increases from the British central bank.
Despite disappointing German industrial data, the Euro (EUR) demonstrated resilience and advanced against many of its counterparts. The positive momentum stemmed from comments made by two European Central Bank (ECB) policymakers, indicating that the ECB would persist with interest rate hikes. Additionally, the Euro benefited from its negative correlation with a weakened US Dollar (USD).
The US Dollar (USD) experienced initial weakness on Wednesday as uncertainty surrounding the Federal Reserve’s future policy plans weighed on USD demand. However, the ‘Greenback’ managed to recover some of its losses later in the session, thanks to a risk-off market sentiment that supported the safe-haven currency.
Tuesday 6th June
Yesterday, the Pound (GBP) stumbled due to a lack of support caused by a scarcity of British economic data. Additionally, a bearish turn in the markets further weighed on the increasingly risk-sensitive Pound, leading investors to exercise caution.
During Tuesday’s trading session, the Euro (EUR) experienced a minor decline following underwhelming economic data from the Eurozone. Notably, German factory orders contracted unexpectedly in April, Eurozone retail sales remained stagnant, and consumer inflation expectations eased, dampening the prospects of an interest rate hike by the European Central Bank (ECB).
The US Dollar (USD) advanced on Tuesday as a gloomy market mood boosted the appeal of the safe-haven currency. However, expectations that the Federal Reserve would pause its ongoing hiking cycle next week placed a cap on the ‘Greenback’s’ gains.
Monday 5th June
On Monday, the Pound (GBP) weakened, with only a marginal upward revision to the UK’s services PMI failing to provide support. The final survey results indicated a slowdown in the country’s crucial services sector, potentially exerting pressure on the Pound.
The Euro (EUR) witnessed a wide range of movements on Monday as investors responded to mixed data from the Eurozone. Although Germany reported a strong trade surplus, weaker-than-forecast PMIs and a significant contraction in producer price inflation offset the positive news. Additionally, the Euro received support in the afternoon due to its negative correlation with the US Dollar, which declined during that period.
Continuing the positive momentum from Friday’s strong jobs data, the US Dollar (USD) started Monday’s session on a rise. However, in the afternoon, a disappointing ISM services PMI caused the USD to retreat. May’s service sector activity nearly came to a halt instead of accelerating as expected, leading to the decline in the ‘Greenback’.
Friday 2nd June
On Friday, the Pound experienced a decline, erasing the gains it had achieved throughout the week, without a clear reason for the movement. It is possible that Sterling had simply become overbought, leading investors to readjust their positions as the week came to a close. Additionally, the absence of any significant data from the UK left the GBP without support.
In the previous week’s trading, the Euro weakened against its stronger counterparts, despite some members of the European Central Bank (ECB) signalling a more hawkish stance. The EUR’s negative correlation with the recovering US Dollar exerted pressure on the common currency, while an increase in risk appetite also diminished the appeal of the traditionally safer Euro.
The US Dollar experienced a rally on Friday following the release of the latest non-farm payrolls report, which greatly exceeded expectations. In May, the US economy added 339,000 jobs, surpassing the predicted 190,000, leading to speculations of an imminent interest rate hike by the Federal Reserve and consequently boosting the USD. However, the safe-haven status of the ‘Greenback’ limited its gains in the face of an improving market sentiment. Furthermore, a larger-than-anticipated rise in the US jobless rate also restrained the currency’s upward potential.
Thursday 1st June
The Pound made notable gains as speculation surrounding an interest rate hike by the Bank of England (BoE) persisted, bolstering the UK currency. Furthermore, a positive market sentiment contributed to the Pound’s rise, as it continued to outperform its safer counterparts.
The Euro encountered a setback yesterday due to softer-than-anticipated inflation figures in the Eurozone. This led to a revision of expectations regarding potential interest rate increases by the European Central Bank (ECB). Nevertheless, the negative impact was partially offset by hawkish remarks from ECB President Christine Lagarde. Additionally, the Euro received support from positive employment data and a weaker US Dollar (USD).
The US Dollar experienced a decline yesterday as expectations for a Federal Reserve rate hike diminished. Comments from two policymakers advocating for a pause in rate hikes this month weighed on the currency. Furthermore, the safe-haven ‘Greenback’ faced reduced demand due to an improving market sentiment. The approval of the US debt ceiling deal in a Congressional vote provided relief to investors, prompting a preference for riskier assets.
Wednesday 31st May
On Wednesday, the Pound continued to garner support as investors maintained aggressive bets on further interest rate hikes by the Bank of England (BoE). There is growing confidence among GBP investors that the BoE will need to raise interest rates to at least 5.5% by the end of 2023, as it grapples with the challenge of curbing inflation in the UK.
The Euro experienced a downward trend due to a decrease in expectations of interest rate hikes by the European Central Bank (ECB). This shift in sentiment followed the release of consumer price indexes from France and Germany, which both revealed that inflation had cooled more than anticipated in May.
During the European trading session, the US Dollar (USD) gained strength in anticipation of the House of Representatives’ vote on the debt ceiling. However, USD exchange rates later declined as market sentiment improved following the successful passage of the deal to raise the debt limit.
Tuesday 30th May
On Tuesday, the Pound exhibited strength as market participants placed their bets on additional interest rate hikes by the Bank of England (BoE). Following last week’s unexpected surge in core inflation, several former BoE policymakers expressed the view that the Bank Rate might need to rise as high as 6% to curb persistent inflationary pressures. With market expectations aligning towards further policy tightening, the British Pound experienced a rally.
The Euro initially encountered a stumble yesterday due to weaker-than-anticipated economic sentiment in the Eurozone during May. However, the Euro managed to stage a robust recovery as market players speculated on more rate increases from the European Central Bank (ECB). Recent statements by policymakers indicating that the ECB would implement at least two more rate hikes boosted confidence in the Euro.
The safe-haven US Dollar faced a decline in demand as risk appetite improved. Market sentiment was cautiously optimistic about a potential agreement to raise the US debt ceiling, which would mitigate the risk of another global economic shock. In the afternoon, stronger-than-expected US consumer confidence data provided support to the US Dollar, preventing it from further depreciation.
Currency Ranges for the month:
GBP/USD: Low: 1.23753 High: 1.28337
GBP/EUR: Low: 1.15548 High: 1.1736
EUR/USD: Low: 1.06275 High: 1.10048