Monthly Currency Report – October 2024

Friday 25th October

The pound (GBP) saw a modest increase at the close of last week as earlier concerns surrounding the upcoming Autumn Budget began to ease. With the support of major banking institutions such as Lloyds and Barclays, fears of a potential ‘mini-budget’ crisis led by Chancellor Rachel Reeves have significantly diminished.

Meanwhile, the euro (EUR) remained relatively stable towards the end of the week, as expectations of interest rate cuts from the European Central Bank (ECB) grew stronger. Following Thursday’s disappointing Eurozone PMIs, investors are becoming increasingly optimistic that the ECB will implement another rate reduction during its December meeting.

The US dollar (USD) ended last week’s trading on a weaker note, influenced by the latest figures on durable goods orders in the US. The data revealed a 0.8% decline in orders for September, slightly better than the anticipated 1% drop. However, the growth rate for August was also adjusted down from 0% to -0.8%.

Thursday 24th October

The pound (GBP) surged, disregarding a surprisingly disappointing services PMI, fueled by optimism that the upcoming UK Autumn Budget will stimulate investment. The announcement from Chancellor Rachel Reeves regarding a revision of fiscal rules to permit borrowing of up to £50 billion in the forthcoming budget uplifted GBP investors, with major banks like Lloyds and Barclays expressing their support for the initiative.

The euro (EUR) experienced a slight decline initially, influenced by a positive market sentiment and underwhelming PMI data. However, as the US dollar (USD) weakened, the euro managed to recover lost ground by the afternoon, benefiting from its typically negative correlation with the dollar.

The US dollar experienced a downturn, retreating from its recent peaks as an increased willingness to take risks dampened demand for the traditionally safe-haven currency. Furthermore, a decline in US Treasury yields contributed to the challenges facing the dollar.

Wednesday 23rd October

The pound (GBP) faced challenges in gaining traction during trading as concerns over the UK’s forthcoming budget lingered. Investors are wary of potential tax increases outlined in the Autumn Budget, even with reported support from Lloyds Banking Group.

The euro (EUR) came under pressure due to the strength of the US dollar throughout the trading day. These declines continued despite comments from European Central Bank (ECB) President Christine Lagarde, who indicated the need for caution regarding future interest rate cuts.

On Wednesday, the US dollar gained strength, fueled by increasing speculation that Donald Trump will emerge victorious in next month’s US Presidential election. Expectations surrounding Trump’s protectionist economic policies are likely to drive US inflation higher, which in turn is supporting the dollar amid assumptions that the Federal Reserve will maintain elevated interest rates for an extended period.

Tuesday 22nd October

The pound (GBP) declined due to rising concerns over the UK government’s borrowing ahead of the Autumn Budget. Public sector borrowing for the year leading up to September surpassed the forecasts set by the Office for Budget Responsibility (OBR). With the Treasury facing pressure and anticipated tax increases in the forthcoming budget, many investors opted to steer clear of the pound.

The euro (EUR) remained underwhelming, losing ground against stronger currencies in the absence of fresh Eurozone data. Furthermore, the euro’s inverse relationship with the US dollar (USD) added to its pressures in the afternoon.

Initially, the US dollar weakened as growing risk appetite reduced its appeal as a safe-haven asset. However, as the trading session progressed and sentiment shifted, the dollar managed to recover from its losses and even gain strength against weaker rivals.

Monday 21st October

The pound (GBP) remained stable at the beginning of this week’s trading session as investors expressed growing caution regarding the upcoming Autumn Budget in the UK. There are rising concerns surrounding Chancellor Rachel Reeves’ plans to announce several tax increases on 30 October.

The euro (EUR) was largely unchanged on Monday following the release of Germany’s latest producer price index. The data indicated that producer prices fell more sharply than anticipated last month, further diminishing expectations for inflation in Germany.

The US dollar (USD) started the week on a strong note, appreciating alongside rising US Treasury yields. A shift in market sentiment towards increased caution in the latter part of Monday’s trading also supported the dollar’s upward momentum as a safe-haven asset.

Friday 18th October

The pound (GBP) wrapped up last week with a slight gain, buoyed by the recent retail sales figures from the UK. Although September’s sales growth decelerated from 1% to 0.3%, this still exceeded expectations of a 0.3% decline.

On the same day, the euro (EUR) experienced a modest increase, recovering some ground lost after the European Central Bank’s (ECB) interest rate reduction announced on Thursday. The euro’s recovery mainly stemmed from its inverse relationship with the US dollar (USD), which faced difficulties on Friday.

The US dollar concluded the week in a weaker position as a generally optimistic market sentiment diminished its attractiveness as a safe-haven asset. Nonetheless, the dollar’s losses were somewhat mitigated by a slight rise in US Treasury yields.

Thursday 17th October

The pound (GBP) showed a mixed performance yesterday as traders reflected on Wednesday’s consumer price index amid a lack of new economic data. Although Sterling managed to recover from its lowest points, expectations of further interest rate cuts by the Bank of England (BoE) prevented it from fully reclaiming its post-inflation losses.

The euro (EUR) experienced a decline yesterday after the European Central Bank (ECB) implemented its third interest rate reduction this year. Despite the cut being anticipated, the euro faced selling pressure as the ECB indicated that the disinflationary trend is “well on track.” Additionally, a final consumer price index reading that fell short of expectations added to the euro’s weakness.

The US dollar (USD) exhibited a lack of clear direction yesterday, trading within a broad range against other currencies. A moderately risk-on market sentiment reduced the appeal of the safe-haven dollar, while stronger-than-expected growth in US retail sales provided some support.

Wednesday 16th October

The pound (GBP) plummeted on Wednesday following the UK’s latest consumer price index, which revealed a sharper-than-anticipated decline in inflation for the previous month. This development weighed heavily on Sterling, fueling speculation that the Bank of England (BoE) may implement consecutive interest rate reductions in November and December.

The euro (EUR) faced challenges in gaining support during the session as investors prepared for the European Central Bank’s (ECB) upcoming interest rate announcement. Recent data releases have heightened expectations that the ECB will announce another 25 basis-point cut during its October policy meeting later today.

The US dollar (USD) generally strengthened on Wednesday as a risk-averse market environment enhanced the appeal of the safe-haven currency. However, the dollar’s gains remained limited due to increasing speculation regarding a series of interest rate cuts by the Federal Reserve in the coming months.

Tuesday 15th October

The pound (GBP) gained ground yesterday following an unexpected decline in UK unemployment, which lifted the spirits of GBP investors. The most recent labour market report revealed that the jobless rate dropped from 4.1% to 4% for the three months ending in August, rather than remaining unchanged. However, the slowdown in wage growth limited the pound’s upward momentum.

The euro (EUR) showed volatility yesterday as bets on a rate cut from the European Central Bank (ECB) countered some positive economic data from Germany. The latest ZEW economic sentiment index for October exceeded expectations, indicating a stronger-than-anticipated recovery in confidence. Despite this, concerns over a possible ECB cut at tomorrow’s meeting prevented the euro from sustaining its initial gains.

The safe-haven US dollar (USD) moved without a definitive trend yesterday amid a mixed market atmosphere. The absence of significant American economic data further contributed to the currency’s fluctuating performance.

Monday 14th October

The pound (GBP) remained stable yesterday, lacking any significant UK economic data to drive movement. GBP investors showed hesitation to adjust their positions in anticipation of several high-impact releases scheduled for later in the week.

The euro (EUR) exhibited a generally subdued performance on Monday as investors prepared for the upcoming interest rate decision from the European Central Bank (ECB). While some economists argue that the ECB could keep its monetary policy unchanged this month, the majority of investors are anticipating another 25 basis-point cut.

The US dollar (USD) started the week on a strong note, buoyed by a risk-averse market environment that led investors to seek the safe-haven currency. This cautious sentiment was driven by disappointing economic data from China and ongoing tensions in the Middle East.

Friday 11th October

The pound (GBP) gained momentum last Friday, supported by the release of the UK’s latest GDP data. The figures revealed that the UK economy grew in August for the first time since May, easing concerns that the strong growth seen earlier in the year had fully waned.

The euro (EUR) struggled on Friday due to increasing worries about the Eurozone economy. Investors are becoming more anxious that the region may be approaching a recession, as consumer activity across the bloc continues to weaken.

The US dollar (USD) ended Friday on a weaker footing after the University of Michigan’s US consumer sentiment index unexpectedly dropped. USD demand also suffered despite US producer price index data beating forecasts, as it showed that price growth had slowed further last month.

Thursday 10th October

The pound (GBP) faltered on Thursday as new concerns over the forthcoming Autumn Budget resurfaced. Reports indicated that the government’s plans to raise revenue were in disarray, with under three weeks remaining before Chancellor Rachel Reeves is set to reveal the budget. This unsettled GBP investors, causing recent optimism to fade quickly.

The euro (EUR) saw mixed performance on Thursday, despite the European Central Bank’s (ECB) September meeting minutes being less dovish than anticipated. Policymakers signalled a gradual lowering of interest rates, but the minutes did little to curb expectations of two further rate cuts this year, especially after more recent remarks from ECB officials.

The US dollar (USD) fluctuated on Thursday but ended the day stronger against several currencies. This movement followed US inflation data, which showed that price pressures cooled only slightly in September, with inflation easing from 2.5% to 2.4%, falling short of expectations.

Wednesday 9th October

The pound (GBP) climbed higher during Wednesday’s trading, buoyed by reports that UK Chancellor Rachel Reeves is planning to amend the government’s debt rules. This potential change would enable increased borrowing, raising hopes among GBP investors that the Chancellor will have more flexibility to invest in infrastructure.

The euro (EUR) struggled on Wednesday, following dovish comments from European Central Bank (ECB) officials. ECB policymaker Martins Kazaks indicated that further interest rate cuts are needed due to the Eurozone’s economic weakness, while François Villeroy de Galhau reinforced this sentiment, stating that another rate cut is highly likely.

The US dollar (USD) saw modest gains early on Wednesday, benefiting from risk-averse market sentiment. However, USD investors remained cautious ahead of the Federal Reserve’s September policy meeting minutes. Once released, the minutes boosted the USD further, as they revealed most Fed policymakers are not expecting another significant rate cut in November.

Tuesday 8th October

The pound (GBP) edged higher on Tuesday, despite the absence of fresh data, as it appeared to recover from oversold conditions. Speculation surrounding Chancellor Rachel Reeves potentially adjusting the government’s fiscal rules ahead of the upcoming budget also provided a boost, as investors viewed the move as a chance to create more room for investment.

The euro (EUR) initially gained on Tuesday, thanks to a stronger-than-expected rebound in German industrial production. However, the euro lost momentum later in the session, pressured by dovish remarks from European Central Bank (ECB) official Mārtiņš Kazāks.

The US dollar (USD) remained firm on Tuesday, benefiting from cautious market sentiment. The safe-haven currency gained ground against its riskier counterparts, but its appeal was limited by the lack of significant US data and investor caution ahead of key events scheduled later in the week.

Monday 7th October

The pound (GBP) struggled on Monday as expectations grew that the Bank of England (BoE) could lower interest rates more aggressively than anticipated. After dovish comments from BoE Governor Andrew Bailey last week, some analysts now believe there is support for consecutive rate cuts in both November and December.

The euro (EUR) saw mixed movement on Monday after the release of uneven economic data. A sharp drop in German factory orders initially weighed on the euro, though the currency found some support later in the session following an improvement in Eurozone retail sales.

The US dollar (USD) gained strength on Monday, as investors reduced their expectations for a large rate cut from the Federal Reserve next month. Stronger-than-expected payroll data from Friday led to the near-complete removal of bets for a 50bps rate cut in November.

Friday 4th October

The pound (GBP) experienced a rebound at the close of last week’s trading, influenced by remarks from Bank of England (BoE) Chief Economist Huw Pill. His statements aimed to cool speculation regarding interest rate cuts, which had surged after BoE Governor Andrew Bailey’s comments led to a significant decline in the pound, hinting at a potential aggressive approach to rate reductions.

The euro (EUR) faced challenges on Friday, impacted by its inverse relationship with the US dollar and cautious remarks from a European Central Bank (ECB) official. Speculation regarding an additional rate cut from the ECB this month gained traction after Mario Centeno indicated that inflation in the Eurozone is now being managed effectively.

The US dollar concluded last week strongly, buoyed by a robust non-farm payroll report revealing that the US economy created 254,000 jobs in September. This data suggests a more resilient labour market than previously anticipated, prompting USD exchange rates to strengthen as investors adjusted their expectations regarding another 50 basis point interest rate cut from the Federal Reserve in the coming month.

Thursday 3rd October

The pound (GBP) experienced a significant drop on Thursday as traders reacted to remarks made by Bank of England (BoE) Governor Andrew Bailey. In a Guardian interview, Bailey indicated that the BoE might adopt a “more aggressive” stance on interest rate reductions, causing Sterling to fall by more than 1% against several currencies.

The euro (EUR) managed to regain some ground yesterday, buoyed by better-than-expected economic indicators from the Eurozone. The final services PMI for September was revised upward to 51.4, surpassing the previous estimate of 50.5. Additionally, Eurozone producer prices increased by 0.6% in August, exceeding predictions of a 0.3% rise, which somewhat mitigated expectations for a rate cut from the European Central Bank (ECB).

The US dollar (USD) found support yesterday amid a risk-averse market atmosphere and decreasing expectations for another 50 basis point cut from the Federal Reserve, enhancing the dollar’s attractiveness. A significantly stronger ISM services PMI for September contributed to the dollar’s strength in the afternoon, revealing that the US services sector experienced its most robust growth since February 2023.

Wednesday 2nd October

The pound (GBP) remained within a tight trading range yesterday as fresh concerns emerged regarding the UK’s forthcoming Autumn Budget. Reports indicated that Chancellor Rachel Reeves might propose substantial cuts to infrastructure spending, contradicting Labour’s commitment to increase investments aimed at stimulating economic growth.

The euro (EUR) showed limited movement on Wednesday following remarks from European Central Bank (ECB) Vice-President Luis de Guindos. He cautioned that “risks to growth are still tilted to the downside,” raising worries about potential challenges for the Eurozone economy.

The US dollar (USD) began the day somewhat flat, despite the ongoing uncertainty surrounding developments in the Middle East. Later in the afternoon, USD exchange rates began to strengthen after a robust ADP employment report eased fears about possible interest rate cuts from the Federal Reserve.

Tuesday 1st October

The pound (GBP) experienced a mixed day yesterday, struggling against stronger currencies following the release of the UK’s final manufacturing PMI. With results aligning with the preliminary estimate, there was limited movement. Nevertheless, a decline in factory activity and falling business confidence weighed on the pound.

The euro (EUR) declined yesterday, reaching new multi-month lows against several currencies after the release of the Eurozone’s September consumer price index. The latest CPI data indicated a drop in inflation from 2.2% to 1.8% last month, falling short of expectations and slipping below the European Central Bank’s (ECB) 2% target. This led to increased speculation about a potential interest rate cut, further weakening the single currency.

The US dollar (USD) rose yesterday as a risk-averse market sentiment heightened demand for the safe-haven currency, following reports of Iran’s plans to attack Israel. Additionally, the latest Job Openings and Labor Turnover Survey (JOLTs) supported the dollar, revealing an unexpected increase in new job vacancies.

Monday 30th September

The pound (GBP) firms throughout yesterday’s session as a generally positive market mood boosts this increasingly risk-sensitive currency. However, these gains remain modest after the UK’s final GDP figure for the second quarter shows a downward revision in growth.

The euro (EUR) trends lower today, following the release of Germany’s latest consumer price index. September’s preliminary CPI data indicates inflation slows to just 1.6%, marking the slowest rate of price growth in over three years, which fuels speculation for another interest rate cut from the European Central Bank (ECB) later this month.

The US dollar (USD) initially remains subdued as an increase in US Treasury yields provides some support for the ‘greenback,’ though this is largely offset by risk-on flows. Later in the evening, USD exchange rates surge following comments from Federal Reserve Chair Jerome Powell, who indicates that the bank is not in a hurry to reduce interest rates.

Currency Ranges for the month:

GBP/USD: Low:  High:

GBP/EUR: Low:  High:

EUR/USD: Low:  High:

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