Friday 24th November – On Friday, the Pound (GBP) closed the week positively, its climb attributed to comments made by Bank of England (BoE) Chief Economist Huw Pill. Pill’s remark about the bank’s cautious stance on inflation fueled speculation about potential interest rate cuts, potentially happening later than initially anticipated.
During Friday’s session, the Euro (EUR) softened, prompted by Germany’s third-quarter GDP confirming the Eurozone’s largest economy teetering on the edge of a recession. Germany’s November business climate indicator missed predictions, despite showing slight improvement.
As the market mood grew more optimistic on Friday, the US Dollar (USD) declined. Despite an unexpected upturn in the US service sector PMI later in the session, the currency failed to gain traction, contributing to the buoyant investor sentiment.
Thursday 23rd November
Moving to Thursday, the Pound (GBP) saw a rally following higher-than-expected UK PMI surveys. November’s preliminary readings revealed growth in the British service sector, sparking hopes for a more positive economic outlook in the UK.
Contrarily, the Euro (EUR) remained subdued on Thursday, slipping against its stronger counterparts due to lacklustre PMI data. Although both manufacturing and services scores slightly exceeded expectations, they still indicated a continued contraction in business activity.
Thursday also saw the US Dollar (USD) weaken as a risk-on market sentiment reduced demand for the safe-haven currency. Furthermore, the closure of American markets for Thanksgiving prevented the US Dollar from staging a recovery.
Wednesday 22nd November
On Wednesday, the Pound (GBP) initially surged but then stumbled amid measures outlined in the UK Autumn Statement, which appeared insufficient to boost growth. The accompanying report from the Office for Budget Responsibility (OBR) painted a rather pessimistic picture, now forecasting higher unemployment and slower growth than previously estimated.
Similarly, the Euro (EUR) struggled initially on Wednesday after the European Central Bank (ECB) expressed concerns about weak growth and higher interest rates posing risks to financial stability. However, EUR managed to regain ground against weaker counterparts later on, despite its negative correlation with a rising US Dollar (USD).
The US Dollar rallied on Wednesday following a significant drop in the latest US jobless claims figure, indicating a tight labour market. This dispelled speculation regarding potential Federal Reserve interest rate cuts.
Tuesday 21st November
On Tuesday, the Pound (GBP) strengthened amid hawkish remarks from some Bank of England (BoE) policymakers during their testimony to the Treasury committee. Governor Andrew Bailey suggested that markets were underestimating inflation’s potential persistence, while policymaker Catherine Mann signalled support for more interest rate hikes.
Conversely, the Euro (EUR) faced selling pressure on Tuesday due to dovish comments from European Central Bank (ECB) policymakers. Rate-setter Francois Villeroy de Galhau hinted at unchanged interest rates for the next few quarters, potentially indicating future rate cuts. However, Pierre Wunsch was less dovish but suggested that additional hikes were unlikely.
Meanwhile, the US Dollar (USD) remained on the defensive as investors recalibrated the currency following cooler US inflation figures. Markets increasingly believe that the Federal Reserve has completed its rate hiking cycle, leading to speculation about the timing of policy tightening adjustments.
Monday 20th November
The Pound (GBP) fluctuated without a clear direction due to the absence of fresh UK economic data on Monday. Ongoing concerns about the UK economy’s health put some pressure on the Pound, although an overall positive market sentiment supported the currency.
Similarly, the Euro (EUR) initially remained subdued on Monday following another drop in German producer price inflation, dampening prospects of European Central Bank (ECB) interest rate hikes. However, EUR managed to inch higher against weaker counterparts later in the day, benefitting from its inverse correlation with a declining US Dollar.
The US Dollar (USD) continued its downward trajectory on Monday, hitting fresh multi-month lows as increased risk appetite weighed on the safe-haven currency. Diminished expectations for Federal Reserve interest rate hikes contributed to the USD’s decline, with markets increasingly convinced of the Fed’s cessation of rate increases.
Friday 17th November
The British Pound (GBP) experienced a decline against many of its counterparts on Friday due to a surprising contraction of 0.3% in UK retail sales for October. Additionally, September’s figure was revised downward from -0.9% to -1.1%. This unexpected decline in data raised concerns about a potential winter recession, which impacted the value of Sterling negatively.The Euro (EUR) initially faced pressure on Friday as confirmation of a sharp slowdown in Eurozone inflation reinforced expectations that the European Central Bank’s (ECB) interest rate hiking cycle is over. However, the single currency’s strong negative trading relationship with the US Dollar (USD) helped EUR rise against its weaker peers over the afternoon.
There was a decline for the safe haven US Dollar at the end of the previous week’s session due to reduced demand driven by a more optimistic market sentiment. Furthermore, the ongoing decrease in Federal Reserve interest rate expectations contributed to the depreciation of the ‘Greenback’.
Thursday 16th November
There was a slight recovery for the Pound (GBP) against its weaker counterparts on the previous day, regaining some ground lost following a subdued inflation report earlier in the week. Hawkish comments from Bank of England (BoE) rate-setter Megan Greene might have supported the GBP. Greene expressed concerns about persistent UK inflation, opposing expectations of a rate cut.
An increase in the Euro (EUR) as a result of a bearish market mood favoured the safer single currency against riskier currencies. Additionally, a decline in the US Dollar (USD) supported the Euro due to their strong negative correlation.
The safe-haven US Dollar stumbled, reversing its initial gains that stemmed from a deteriorating market sentiment. This came as US jobless claims and industrial production both showed worse-than-expected results, with an increase in unemployment claims and a decline in industrial output.
Wednesday 15th November
There was a drop in Pound (GBP) following the release of the UK’s latest consumer price index, which fell short of forecasts. Both headline and core inflation decreased more than anticipated, leading to reduced expectations for another Bank of England (BoE) interest rate hike and subsequently lower demand for Sterling.
The Euro (EUR) slipped after the Eurozone’s latest industrial production figures revealed a larger-than-forecast contraction in factory output for September. Additionally, the safer common currency struggled against risk-sensitive currencies as market sentiment turned optimistic.
An increase in US Treasury bond yields provided some support to the US Dollar (USD). However, other factors led to mixed movement, with US retail sales declining last month, albeit less than expected. Additionally, a drop in producer prices dampened expectations of Federal Reserve rate hikes, causing the USD to hover near recent lows.
Tuesday 14th November
There was some ground gained for the Pound (GBP) following a robust labour market report that exceeded expectations. The UK unemployment rate held steady at 4.2% instead of rising to the anticipated 4.3%, while wage growth remained at historically high levels.
The Euro (EUR) initially strengthened after a notable recovery in German economic sentiment, boosting the single currency. However, the safer Euro later stumbled against riskier peers due to an abrupt improvement in market sentiment.
The US Dollar (USD) faced a significant decline following the release of the American consumer price index, which fell below expectations. With both headline and core inflation cooling more than predicted, market confidence grew in the belief that the Federal Reserve has concluded its rate hiking cycle. This triggered a sell-off in USD.
Monday 13th November
The Pound (GBP) saw success against safer currencies due to a cautiously positive market sentiment, which favoured the increasingly risk-sensitive UK currency. However, Sterling’s gains appeared limited as investors awaited the eagerly anticipated UK labour market report.
As for the Euro (EUR), it remained relatively subdued, weakening against stronger counterparts due to the absence of notable Eurozone economic data. With no significant drivers for movement, the safer single currency responded to market risk dynamics, resulting in a decline against riskier rivals.
The US Dollar (USD) edged lower as a bullish market sentiment undermined the safe-haven currency. Attempts at recovery around midday, bolstered by an increase in US Treasury yields, were short-lived as the American currency continued to weaken.
Friday 10th November
The Pound (GBP) slipped against stronger currencies despite the UK’s GDP beating expectations in the third quarter. Although the economy avoided a downturn, the Pound faced pressure due to a bleak growth outlook.
Fortunately for the Euro, it managed to gain against riskier currencies on Friday, buoyed by its status as a safer option. However, the absence of significant Eurozone economic data capped its potential for an upside.
The US Dollar saw a general upward trend on Friday, still benefitting from Jerome Powell’s hawkish speech. Mixed afternoon data, with a drop in consumer confidence but rising inflation expectations, kept the possibility of Fed rate hikes alive.
Thursday 9th November
It was a challenging day for the Pound, slipping against its robust counterparts after Bank of England (BoE) Chief Economist Huw Pill made dovish comments. Pill suggested that elevating interest rates wasn’t essential to curb inflation, impacting Sterling’s potential.
The Euro (EUR) remained subdued, influenced by rather pessimistic remarks from European Central Bank (ECB) Vice-President Luis de Guindos. De Guindos highlighted a more negative growth outlook for the Eurozone, contributing to concerns about a potential recession in the region.
The safe-haven US Dollar (USD) initially showed uncertainty as market sentiment shifted and weaker US job data added pressure on the ‘Greenback’. However, later in the day, Federal Reserve Chair Jerome Powell’s more assertive stance, expressing uncertainty about the peak of interest rates, triggered a rally in the USD.
Wednesday 8th November
A volatile trading pattern continued for the Pound, lacking fresh drivers for GBP investors, resulting in heightened volatility. Sterling weakened against its stronger counterparts but fared better against its weaker rivals.
The Euro (EUR) initially faced challenges due to confirmed cooling German inflation and larger-than-expected contractions in Eurozone retail sales, impacting the common currency. However, EUR later recovered in the session, benefitting from its strong negative correlation with a declining US Dollar.
There was some initial traction for the US Dollar due to a risk-averse market, attracting safe-haven flows. However, as the session progressed, improved market sentiment diminished USD’s earlier gains. Additionally, an unremarkable speech by Federal Reserve Chair Jerome Powell seemed to undermine the US Dollar.
Tuesday 7th November
Limited fresh data from the UK led the Pound (GBP) to fluctuate widely against its peers. Despite a softened sentiment in Bank of England (BoE) interest rate hike expectations, triggered by Chief Economist Huw Pill hinting at potential summer rate cuts, the Pound managed to strengthen against some of its weaker rivals.
The Euro (EUR) faced a stumble in the morning due to a significant 1.4% drop in German industrial production for September, well beyond the forecasted 0.1% contraction. Despite this, the Euro, known for its stability, outpaced riskier currencies amidst a gloomy market atmosphere.
The US Dollar (USD) surged as the market sentiment soured, reviving demand for the safe-haven currency. The ‘Greenback’ might have reached oversold conditions after recent downward movements, and the gains observed on that day partly resulted from a necessary market correction.
Monday 6th November
There was some momentum at the start of the day for the Pound, building on its gains from the previous week, driven by an optimistic vibe that supported the increasingly risk-sensitive currency. However, the Pound relinquished some of its early gains during the afternoon, possibly due to profit-taking actions.
The Euro (EUR) achieved success against its weaker counterparts, spurred by an unexpected 0.2% expansion in German factory orders for September. Nonetheless, the common currency’s upside was restrained as the previously reported 3.9% growth in August was significantly revised down to 1.9%.
The US Dollar (USD) initially faced pressure as the new week commenced, with the impact of Friday’s disappointing non-farm payrolls data lingering. However, the ‘Greenback’ managed to recover later in the session, likely spurred by potential oversold conditions and a rise in US Treasury bond yields that supported its resurgence.
Friday 3rd November
The Pound (GBP) surged higher on Friday as the market sentiment turned bullish. Despite the absence of significant data and reduced expectations of a Bank of England (BoE) interest rate hike, the Pound, which has become increasingly sensitive to market risk, experienced a significant upswing. As risk-on trading gained momentum, GBP exchange rates saw a substantial rise.Despite disappointing German trade data, the Euro (EUR) managed to recover its losses during Friday’s trading session. Towards the end of the European session, USD exchange rates dipped, enabling the common currency to strengthen, given their inverse relationship.
After a lacklustre start, the US Dollar (USD) experienced a significant decline during Friday’s trading session, primarily due to discouraging employment data. The October non-farm payrolls report fell well below expectations, indicating a sharp decline in private sector job creation. Additionally, USD faced further pressure later in the session as the ISM services PMI failed to meet expectations.
Thursday 2nd November
The Pound (GBP) exhibited fluctuations during the previous session as investors reacted to the Bank of England’s (BoE) interest rate decision. As expected, the BoE opted to keep interest rates unchanged, but three policymakers voted in favour of a rate hike. Nevertheless, the bank’s pessimistic outlook on the UK’s economic prospects ultimately weighed on GBP.
The Euro (EUR) strengthened thanks to its negative correlation with the weakening US Dollar (USD). However, an increase in German unemployment limited EUR’s upward momentum.
The US Dollar remained on the back foot following the Federal Reserve’s interest rate decision. While Fed Chair Jerome Powell did leave open the possibility of another rate hike, his language was notably more dovish compared to after the Fed’s September decision. This fueled speculation that the tightening cycle of the US central bank has come to an end.
Wednesday 1st November
The Pound (GBP) continued to trade without a clear direction on the previous day, primarily due to the lack of significant data. In the absence of fundamental factors guiding GBP movements, Sterling’s performance was marked by fluctuations against its various counterparts.
The Euro (EUR) faced difficulties as Tuesday’s weaker Eurozone GDP and inflation data continued to exert downward pressure on the currency. After the Eurozone economy contracted by 0.1% in the third quarter, and inflation cooled rapidly in October, market expectations for further action from the European Central Bank (ECB) dwindled.
The safe-haven US Dollar (USD) experienced some volatility as market sentiment shifted, along with mixed economic data. Following the Federal Reserve’s decision, USD slumped as the central bank opted to keep interest rates unchanged. Despite Fed Chair Jerome Powell leaving the door open for another rate hike, USD declined.
Tuesday 31st October
The Pound (GBP) traded without a clear direction due to the absence of significant UK economic data, leaving the currency without a clear trend. Sterling also remained subdued ahead of the Bank of England (BoE) interest rate decision as investors refrained from making significant bets.
The Euro (EUR) initially moved higher on the previous day, benefiting from its inverse relationship with a weakening US Dollar (USD). However, the Euro’s gains were trimmed as the session progressed. A USD rebound impacted EUR, and reduced expectations for European Central Bank (ECB) interest rate hikes, following cooler inflation figures, may have also weighed on the common currency.
The safe-haven US Dollar fell during the European session due to an initially positive market sentiment. However, sentiment turned negative, allowing USD to make a strong recovery during the American trading hours.
Monday 30th October
The Pound (GBP) had a muted performance on Monday, as the absence of significant data left the UK currency struggling to find support. Concerns about the health of the British economy persisted, exerting downward pressure on the Pound.
The Euro (EUR) strengthened against its weaker counterparts after German GDP exceeded expectations, reporting a -0.1% contraction in the third quarter instead of the anticipated -0.3%. EUR also benefited from its negative correlation with the declining US Dollar (USD). However, a sharper-than-expected slowdown in German inflation limited the common currency’s gains.
The US Dollar stumbled initially, influenced by a risk-on sentiment that reduced demand for the safe-haven ‘Greenback.’ Additionally, expectations of the Federal Reserve maintaining unchanged interest rates at its upcoming meeting weighed on the American currency.
Currency Ranges for the month:
GBP/USD: Low: 1.20965 High: 1.26307
GBP/EUR: Low: 1.14112 High: 1.15533
EUR/USD: Low: 1.05323 High: 1.09644