Friday 21st October – The Pound dropped at the start of trading as a result of disappointing data as UK retail sales dropped by 1.4%. Furthermore, public sector borrowing also went above forecasts while political uncertainty placed the currency under pressure. Despite its risk sensitivity, the Pound did manage to make some gains against some of its safer peers.
It was a mixed day for the Euro as it strengthened against a number of its weaker peers. However, it slipped during the afternoon following the escalation of the Ukraine crisis and even improved consumer confidence was not enough to help the single currency firm.
The US Dollar initially firmed but then it took a turn and dropped as markets started to trim Federal Reserve interest rate increase bets. There was a rapid sell-off in USD as speculation rose around the Fed beginning to slow down its rate or monetary policy tightening.
Thursday 20th October
There was a lot of movement in the Pound as a rally was started following comments from the Bank of England, easing fears of financial instability. These gains were then extended as Liz Truss resigned as UK Prime Minister. Despite this, some of the gains were lost as markets remained concerned about the political uncertainty in the UK.
It was a challenging day for the Euro as it slipped against many of its peers as investors remained concerned about the Ukraine conflict. The negative correlation with the weaker US Dollar did help to minimise losses which gave some support to the single currency.
The US Dollar also lost ground during the session as a risk-on mood meant that investors shunned the safe-haven currency. Despite this, the market mood moved slightly as a result of global volatility and that helped the Greenback to recover some of its losses.
Wednesday 19th October
As UK inflation exceeded expectations rising to a 40-year high of 10.1%, the Pound slipped during trading. Despite the expectations of strong action from the Bank of England, the Pound couldn’t firm and instead, it slipped as a result of investors becoming concerned about the cost of living crisis.
The Euro also lost some of its ground against many of its peers following the release of Eurozone inflation figures which came below initial estimates. This slowed down bets of a rate rise by the European Central Bank, putting pressure on the single currency.
It was a different day for the US Dollar as it strengthened thanks to a risk-off mood that took hold of the markets. As a result, the US Dollar became more appealing especially as political chaos in the UK and growth concerns from China spooked markets.
Tuesday 18th October
The Pound struggled as concerns around political stability and calls for Liz Truss to resign continued to dampen the appeal of the currency. There was also confusion around whether the Bank of England would sell some of its government gilts, leaving investors jittery.
There was no clear direction for the Euro and that caused it to fluctuate throughout the day. Markets responded to mixed German data as sentiment in the largest economy in Europe improved slightly. In addition, market turbulence was also caused by the ongoing Russian attacks in Ukraine.
It was a similar day for the US Dollar as it wavered while the risk-on market mood also hampered the Greenback. Manufacturing data was better than expected and that helped the currency slightly although it still lost ground against many of its peers.
Monday 17th October
The Pound rose higher during trading following the news that the Chancellor, Jeremy Hunt plans to reverse all of the unfunded tax cuts that were announced in the mini budget just three weeks ago. This U-turn helped to create stability in the markets as they all rallied in response.
Early on, the Euro slipped as Russia continued to attack Ukraine and as the conflict escalated, investors grew anxious. Despite this, the single currency did make up for some of these losses and the currency was supported by a drop in the US Dollar.
The US Dollar took a downward turn during trading as a bullish approach to the markets meant that traders turned away from the Greenback. This came after markets reacted to the UK’s U-turn on the mini-budget, leaving investors hopeful that the financial crisis in the UK is easing.
Currency Ranges for the week:
GBP/USD: Low: 1.10768 High: 1.14316
GBP/EUR: Low: 1.13936 High: 1.16432
EUR/USD: Low: 0.971747 High: 0.986857