Friday 16th December -The Pound was vulnerable at the end of the week as there was a drop in retail sales during November that weighed on the currency. Despite this, it did manage to make up for some losses as the latest PMIs showed that the services sector didn’t contract this month.
The Euro strengthened as PMI data for the Eurozone came in better than expected. Manufacturing activity was higher than expected as was the services PMI, all of which helped to support the single currency.
It was a good start to the day for the US Dollar as the currency got support from a drop in global risk appetite. However, the latest PMI data saw these gains disappear, despite US Treasury bond yields rising.
Thursday 15th December
The Pound dropped against many of its peers as the Bank of England announced another interest rate rise. The language from the Bank of England was cautious but this, along with a risk-off mood and fears of a recession left the currency struggling.
The Euro had different fortunes as it made up ground against many of its peers following the news that the ECB aimed to raise interest rates significantly. It was suggested that two more half-point rises would be likely.
The US Dollar roared higher as it benefitted from tailwinds and a risk-off market mood that helped to support the safe-haven currency. There was a sharp dip from poor US retail sales although the currency managed to recover quickly.
Wednesday 14th December
There were modest gains for the Pound as it reacted to the latest inflation release. Inflation came in below expectations for November, leaving investors hopeful that the worst is over in the current cost-of-living crisis.
The Euro experienced a mixed day of trading as it experienced pressure from the latest industrial production figures which showed a sharp contraction in output. Despite this, there was some support from the ECB rate hike bets that helped to support the single currency.
The US Dollar remained firm through the European session and then surged after news about the latest interest rate decision from the Federal Reserve. A 50 bps increase was implemented although it did suggest that the rate will reach a peak that is higher than expected and that hurt the Greenback.
Tuesday 13th December
The Pound moved in a wide range as UK jobs data was mixed, showing signs of increasing unemployment and rising wage growth. However, a risk-on mood meant that the currency lost ground against its rivals.
The Euro weakened initially and even a strong recovery in the German ZEW economic sentiment index couldn’t support it. However, it did make up ground against a number of weaker peers due to its negative correlation with the US Dollar.
Monday 12th December
As the British economy showed signs of growth, the Pound managed to strengthen against a number of peers. Despite this, comments from the Chancellor regarding difficult times ahead meant that the currency saw losses.
There was some success for the Euro as a drop in market mood meant that the single currency made gains against riskier peers. A drop in the US Dollar also helped to support the currency although as the US Dollar made a recovery, the Euro suffered.
The US Dollar lost ground at the start of the session following poor trading conditions. It did recover during the afternoon as US yields improved and that helped to give the Greenback a boost.
Currency Ranges for the week:
GBP/USD: Low: 1.21232 High: 1.24433
GBP/EUR: Low: 1.1406 High: 1.16714
EUR/USD: Low:1.05128 High:1.07117