Weekly Report – 20th June to 24th June 2022

Friday 24th June – There was some fluctuation in the Pound after investors made decisions based on the latest retail sales figures. Sales had contracted by 0.5% which was lower than originally forecasted and that helped to boost the currency while a shift in market mood also helped to limit any losses.

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It was a mixed end to the week for the Euro as German business morale dropped more than expected and this placed pressure on the single currency. Despite this, the negative correlation with the US Dollar gave the currency some support.

An increase in appetite for risk meant that the US Dollar struggled as traders chose to sell the currency. Investors seemed to be boosted by the news that the global economy is slowing which should see inflationary pressures ease.

Thursday 23rd June – The Pound lost ground initially during trading as investors seemed concerned about government borrowing as well as poor PMI results. Despite this, the losses were limited as it benefited from a sell-off of the Euro.

Disappointing PMI results impacted the Euro which saw it slump while service-sector activity also dropped more than expected, leading to worries of a recession. There were also ongoing energy issues and this dented the single currency.

At the start of the session, the US Dollar increased as it took advantage of a downbeat market mood. However, these gains were short lived as an improvement in risk sentiment saw it make losses while a drop in US Treasury yields also impacted the currency.

Wednesday 22nd June – Following the release of the latest inflation rate reading, the Pound slipped but these losses soon disappeared. There were no clear drivers for this recovery but the currency managed to make up ground against many of its peers.

Investors had concerns eased regarding the Eurozone economy after researchers suggested that a ‘stagflation scenario’ was still some way off. This helped to boost the single currency along with a drop in the US Dollar thanks to the negative correlation.

The US Dollar dropped and even a downbeat market mood was not enough to improve the Greenback. Furthermore, a drop in US Treasury yields also held the currency back while it was announced that further rate rises could cause the US to enter a recession.

Tuesday 21st June – The Pound dropped behind a number of its peers as fears of a recession offset certain comments from the Bank of England. The ongoing rail strikes also added to the concerns that inflation and ongoing pay concerns could see the UK enter a recession.

The Euro made up some ground as it benefitted from an upbeat market mood while the European Central Bank also announced that a half-point rise in September looked likely, all of which helped to boost the single currency.

It was a mixed day for the US Dollar and that meant that it trended lower overall as market mood improved. This dented the appeal for the Greenback while warnings that the US might head into a recession also put pressure on the safe-haven currency.

Monday 20th June –  The Pound fluctuated as investors took stock of the situation as they expected the currency to experience more volatility during the week. There was little direction for the Pound although the concerns around the rail strikes did reduce support for the currency.

It was a similar day for the Euro as it fluctuated as investors followed the European Central Bank for news regarding recession risks while it also announced that it would address fragmentation.

The US Dollar lacked little direction as trading conditions were thin and American markets were closer for the Juneteenth federal holiday. However, it did avoid losses even though there was a risk-on market mood.

Currency Ranges for the week:

GBP/USD: Low: 1.21726 High: 1.2314

GBP/EUR: Low: 1.15746  High: 1.16741

EUR/USD: Low: 1.04738  High: 1.05987

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