Monthly Currency Report – September 2023

Friday 29th September – The British Pound (GBP) navigated a rather uncertain path, mirroring the end-of-quarter turbulence in the currency market. In an interesting twist, an upward revision in British GDP did little to bestow enduring strength upon the Sterling, with economists cautioning about the looming possibility of a recession in the UK.

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Meanwhile, the Euro (EUR) experienced a dip in the morning due to Eurozone inflation cooling more than initially anticipated, which dented hopes for an imminent European Central Bank (ECB) interest rate hike. However, as the day unfolded, the EUR managed to stage a comeback against numerous counterparts. A shift in market sentiment towards pessimism bolstered the appeal of the Euro as a safer alternative..

Conversely, the US Dollar (USD) faced some downward pressure during the week’s end, driven by a risk-on sentiment and a slowdown in US inflation, which collectively weighed on the safe-haven ‘Greenback.’ Nonetheless, the USD staged a remarkable resurgence in the latter half of the trading session. As the third quarter concluded, a shift in market mood and a repositioning of investment portfolios allowed the US Dollar to recoup its earlier losses.

Thursday 28th September

The Pound (GBP) initially gained strength as declining mortgage rates alleviated some concerns surrounding the UK’s cost-of-living crisis. Nevertheless, as the afternoon wore on and a dearth of data left the currency exposed, Sterling relinquished its earlier gains to its stronger peers.

Similarly, the Euro (EUR) grappled with a wide trading range throughout the day. This was primarily due to a mixed economic sentiment index that left the currency directionless. The EUR found some solace in its inverse relationship with a weaker US Dollar, shielding it from steeper declines.

In contrast, the US Dollar (USD) weakened on this day as investors opted to cash in on the currency’s recent gains ahead of high-impact inflation data. A cautiously optimistic market sentiment further eroded the USD’s appeal, as investors favoured riskier assets over the safe-haven ‘Greenback.’

Wednesday 27th September

The Pound (GBP)  navigated a wide range as a dearth of UK economic data made it challenging for Sterling to establish a clear trajectory. Lingering concerns about the British economy and a retreat in Bank of England (BoE) interest rate hike expectations limited any substantial gains for the GBP.

The Euro (EUR) encountered hurdles on this day following concerning data from Germany. Consumer confidence in the Eurozone’s largest economy plummeted to a six-month low, falling short of expectations. Additionally, the common currency was adversely affected by its strong inverse correlation with the US Dollar, which gained momentum during the session.

The US Dollar (USD) extended its recent winning streak as the prevailing risk-off sentiment in the market prompted a flow of safe-haven investments towards the ‘Greenback.’ Additionally, the USD benefited from better-than-expected US data, with durable goods orders unexpectedly expanding in August.

Tuesday 26th September

The Pound (GBP)British Pound (GBP) remained on the defensive as ongoing concerns about the UK economy persisted. Recent economic forecasts from financial institutions all pointed towards prolonged stagnation and the potential end of Bank of England (BoE) interest rate hikes, which weighed heavily on the GBP.

Meanwhile, the Euro (EUR) exhibited strength as the safer single currency benefited from a cautious market sentiment. The EUR also profited from its inverse relationship with the US Dollar, which experienced a retreat during European trading hours.

The US Dollar (USD) initially made gains on this day, driven by a prevailing risk-off sentiment that propelled the safe-haven currency to a fresh ten-month high. However, the USD later pared its gains as the trading session progressed, possibly due to profit-taking.

Monday 25th September

The British Pound (GBP) continued its descent as the prevailing bearish sentiment in the markets weighed on the increasingly risk-sensitive UK currency. Mixed retail sales data did little to uplift the Sterling, as new data from the Confederation of British Industry (CBI) beat forecasts but still revealed a significant decline in retail trade.

Simultaneously, the Euro (EUR) faced a decline as investors reacted to a flurry of speeches from European Central Bank (ECB) policymakers. Although some officials expressed a more hawkish stance than others, there were clear signs that interest rates may have plateaued, which pushed the Euro lower.

Meanwhile, the safe-haven US Dollar (USD) surged to ten-month highs on this day as risk aversion swept through the markets. Fears surrounding elevated global borrowing costs, combined with concerns over China’s ailing property sector and the potential US government shutdown, drove anxious investors towards the safer haven of the US Dollar.

Friday 22nd September – The British Pound (GBP) concluded a challenging week with additional declines on Friday, as the UK’s services PMI reported worse-than-expected figures. The latest survey revealed a deepening contraction in the service sector’s activity for the month, intensifying concerns about a looming recession and reinforcing the belief that the Bank of England (BoE) has completed its interest rate hikes.

On the other hand, the Euro (EUR) experienced volatile trading last Friday, oscillating widely against other currencies following the release of the most recent PMI surveys. Manufacturing activity weakened more than anticipated, while the service sector, though still indicating contraction, surpassed forecasts.

The US Dollar (USD) also navigated uncertain waters on Friday as shifting market sentiment led to volatility in the safe-haven currency. Adding to the afternoon’s confusion, the US PMIs delivered mixed results, with manufacturing exceeding expectations but service sector activity falling short.

Thursday 21st September

The Pound (GBP) plummeted to multi-month lows on the previous day after the Bank of England (BoE) opted to keep interest rates unchanged for the first time in two years. While the BoE left the door ajar for potential future tightening, some economists speculated that UK interest rates may have reached their peak.

The Euro (EUR) strengthened on the same day as a risk-off atmosphere and a slight dip in the US Dollar (USD) buoyed the single currency’s value. However, mixed comments from European Central Bank (ECB) officials led to choppy trading in the EUR, with policymaker Martin Kazaks expressing satisfaction with current rates but cautioning about inflation risks.

The US Dollar reached multi-month highs on Wednesday, following the Federal Reserve’s interest rate decision the previous evening. The Fed signaled the possibility of another rate hike, sparking a USD rally. However, profit-taking later in the day trimmed some of the currency’s gains as investors looked to capitalize on its strength.

Wednesday 20th September

The British Pound (GBP) suffered a setback on the prior day after unexpectedly cool UK inflation figures caused markets to significantly revise down their expectations of Bank of England (BoE) interest rate hikes. Both headline inflation and the core rate cooled more than anticipated. With uncertainty now surrounding the BoE’s rate decisions, Sterling faced a decline.

The Euro (EUR) managed to gain ground against its weaker counterparts on Wednesday, thanks to its inverse relationship with the weakening US Dollar (USD). Nonetheless, a positive market sentiment limited the single currency’s upward movement.

A buoyant market atmosphere caused the US Dollar to stumble on the same day, as investors favored riskier assets over the safe-haven currency. In the evening, the Federal Reserve’s interest rate decision prompted a USD rally. While the US central bank left rates unchanged, it hinted at the possibility of another hike before year-end.

Tuesday 19th September

The British Pound (GBP) displayed mixed performance on the preceding day, with the absence of economic data leaving the currency to be influenced by prevailing market sentiment. A cautiously optimistic tone led to GBP’s strengthening against safer rivals. However, apprehension ahead of the Bank of England (BoE) interest rate decision curbed Sterling’s gains.

The Euro (EUR) encountered headwinds on the same day, as a slight downward revision to the Eurozone’s final CPI reading for August dampened expectations of European Central Bank (ECB) rate hikes. Additionally, an uptick in market sentiment caused the safe-haven Euro to weaken against riskier currencies.

The US Dollar (USD) declined in the morning as an increase in risk appetite reduced demand for the safe-haven currency. Nevertheless, a downturn in market sentiment later in the day allowed the USD to recover some of its losses.

Monday 18th September

The British Pound (GBP) remained subdued on the previous day, slipping against its stronger counterparts as GBP investors braced themselves for the upcoming Bank of England (BoE) decision later in the week. Lingering concerns stemming from last week’s unfavorable economic news continued to weigh on the Pound, although limited fresh data restricted significant movements.

The Euro (EUR) experienced fluctuations during the trading session, lacking a clear direction, amid mixed comments from European Central Bank (ECB) officials following last week’s dovish rate hike. Later in the session, a decline in the US Dollar (USD) boosted the single currency, driven by its inverse correlation with the USD.

The US Dollar also faced erratic trading on the same day as market sentiment shifted in anticipation of the Federal Reserve’s rate decision scheduled for Wednesday. Toward the end of the session, the USD registered modest losses as an improved market sentiment diminished the appeal of the safe-haven currency.


Friday 15th September
– The Pound (GBP) faced difficulties on Friday as concerns about the UK economy’s health continued to trouble GBP investors. Recent data revealed a 19% year-on-year increase in company insolvencies in August, primarily attributed to higher interest rates burdening British businesses. This added to the growing worries that the UK might soon enter a recession.

The Euro (EUR) exhibited a modest recovery on Friday, recouping some of its losses following the European Central Bank’s (ECB) interest rate decision. Investors took the opportunity to buy on the dip, although the single currency’s gains were limited.

The US Dollar (USD) experienced mixed conditions on Friday, resulting in a wide range of trading against its counterparts. While an improving market sentiment initially put pressure on the safe-haven currency, rising US Treasury yields provided support to the USD.

Thursday 14th September

The Pound (GBP) declined on this day amid mounting concerns that the UK economy was heading towards a recession. Recent gloomy economic data, including a larger-than-expected contraction in GDP on Wednesday, heightened anxiety about the UK’s economic outlook.

The Euro (EUR) plummeted following the European Central Bank’s (ECB) decision to raise interest rates while hinting that this hike might be the last one for now. The ECB stated that current rates were sufficiently restrictive, indicating a pause in tightening.

The US Dollar (USD) strengthened after robust American economic data boosted expectations of Federal Reserve rate hikes. Both producer price inflation and retail sales growth unexpectedly accelerated, reflecting continued demand in the US economy. Additionally, low initial jobless claims suggested a strong labour market.

Wednesday 13th September

The Pound (GBP) faced a rough start as it retreated in response to weaker-than-expected UK GDP figures, showing a 0.5% contraction in growth for July. However, Sterling managed to recover most of these losses later in the session amid a modest improvement in market risk appetite.

The Euro (EUR) traded sideways as investors were cautious ahead of the European Central Bank’s (ECB) impending interest rate decision. This lack of movement persisted despite deeper-than-expected factory output contraction reported in the Eurozone’s industrial production figures for July.

The US Dollar (USD) traded erratically following the release of the latest US consumer price index. USD initially rallied in response to stronger-than-expected headline inflation, but gains waned as core inflation continued to fall, with the CPI jump mainly attributed to energy prices.

Tuesday 12th September

The Pound (GBP) saw a sharp decline at the start of the session due to signs of a slowdown in the UK job market, leading to a pullback in Bank of England (BoE) interest rate hike expectations. Although wage growth remained high, the rise in unemployment and a decrease in vacancies weighed on investor sentiment.

The Euro (EUR) dropped despite an unexpected improvement in Germany’s ZEW economic sentiment indicator. However, the decline in the current conditions element of the index to a three-year low placed pressure on the Euro.

A risk-averse market sentiment boosted the safe-haven US Dollar (USD) as investors favoured the ‘Greenback’ over riskier assets. Nonetheless, the USD’s gains were limited as investors refrained from aggressive bets ahead of a crucial consumer price index release.

Monday 11th September

The Pound (GBP) initially gained against safer currencies as an optimistic mood favoured the increasingly risk-sensitive GBP. However, Sterling struggled to maintain its upward momentum later in the session due to the absence of UK data.

The Euro (EUR) encountered early headwinds as the European Commission downgraded the Eurozone’s GDP forecast, raising concerns about a potential recession. Nevertheless, the EUR found support in its strong negative correlation with a weakening US Dollar, allowing it to regain ground.

The US Dollar (USD) faced challenges as an improved risk appetite reduced demand for the safe-haven ‘Greenback.’ Positive expectations regarding the Federal Reserve’s “soft landing” and favourable economic news from China encouraged investors to opt for riskier assets.

Friday, September 8th

The British Pound (GBP) ended the previous week on a negative note, as market sentiments shifted regarding potential interest rate hikes by the Bank of England (BoE). Following discouraging economic news and dovish remarks from BoE Governor Andrew Bailey, economists now anticipate only one final 25-basis-point hike from the British central bank.

The Euro (EUR) faced a similar fate on Friday, struggling to gain support as market expectations for another rate hike by the European Central Bank (ECB) were scaled back. There is growing anticipation that the ECB may have already completed its hiking cycle, with widespread predictions of unchanged rates at this week’s meeting.

The US Dollar (USD) encountered initial headwinds on Friday, primarily due to a decline in US Treasury yields, which pushed the ‘Greenback’ lower. However, this safe-haven currency regained its strength amid a deteriorating market sentiment, concluding the week near a six-month high.

Thursday 7th September

The British Pound (GBP) remained subdued on this day, registering modest losses against many of its counterparts, as recent dovish statements from the Bank of England (BoE) continued to weigh on the currency. A significant drop in UK house prices added further pressure to the GBP, with analysts suggesting that this could dissuade the BoE from raising interest rates significantly.

The Euro (EUR) stumbled during the session, with a larger-than-expected contraction in German industrial production impacting the EUR early on. Additionally, a downward revision to Eurozone GDP further strained the single currency, as second-quarter growth came in at 0.1%, contrasting with previous estimates of 0.3%.

The US Dollar (USD) edged higher on this day following a surprising decrease in jobless claims from the previous week, boosting expectations of Federal Reserve rate hikes. The indication that the US labour market remained historically tight led to market speculations of further tightening by the Federal Reserve, bolstering the USD.

Wednesday 6th September

The British Pound (GBP) experienced a significant decline amid fresh warnings about the bleak economic outlook for the UK. Forecasts pointed toward two years of sluggish economic growth due to high interest rates affecting households and businesses. Comments from Bank of England (BoE) Governor Andrew Bailey contributed to the GBP’s weakness, as he suggested that the bank was “much nearer now to the top of the cycle,” dampening expectations of BoE rate hikes.

The Euro (EUR) softened during the day, facing early pressure following reports of an 11.7% contraction in German factory orders in July. Declining Eurozone retail sales added to the EUR’s woes, compounded by its negative correlation with a strengthening US Dollar.

The US Dollar (USD) rallied during the afternoon after a surprisingly robust US services PMI boosted the ‘Greenback.’ In August, the American service sector unexpectedly accelerated, experiencing its fastest growth in six months. This strong data raised anticipations of more interest rate hikes by the Federal Reserve.

Tuesday 5th September

The British Pound (GBP) traded within a wide range on this day, influenced by various factors. While an upward revision to the British services PMI may have offered some support to the GBP, the reading still indicated a contraction in activity. Simultaneously, a gloomy market sentiment weighed on the increasingly risk-sensitive Pound.

The Euro (EUR) faced selling pressure following a downward revision of the Eurozone’s final services PMI. Furthermore, another decline in the Producer Price Index (PPI) added to the selling pressure on the EUR. With easing producer prices, market expectations for additional interest rate hikes by the European Central Bank (ECB) were reined in.

Monday 4th September

The British Pound (GBP) exhibited a wide trading range on this day, influenced by mixed factors. Despite an upward revision to the British services PMI that may have provided some support to the GBP, the reading still indicated a contraction in economic activity. Concurrently, a pessimistic market sentiment weighed on the increasingly risk-sensitive Pound.

The Euro (EUR) faced selling pressure following a downward revision of the Eurozone’s final services PMI. Additionally, another decline in the Producer Price Index (PPI) added to the selling pressure on the EUR. Easing producer prices led to a reduction in market expectations for further interest rate hikes by the European Central Bank (ECB).

The US Dollar (USD) surged on this day as a deteriorating market sentiment increased demand for the safe-haven currency. Weak economic data from China unsettled global investors, while a spike in oil prices raised concerns about the possibility of higher inflation.

Currency Ranges for the month:

GBP/USD: Low: 1.21153 High: 1.26354

GBP/EUR: Low: 1.14728 High: 1.17273

EUR/USD: Low: 1.0492 High: 1.08041

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