Weekly Report – 24th October – 28th October 2022

Friday 28th October -After weakening during the start of trading, the Pound eventually surged higher, despite there being no clear driver for the currency. The Pound was boosted by optimism surrounding the outlook for the UK.

currency news

 

There were no clear gains for the Euro, even following the release of strong German data as GDP growth and inflation in Germany came in higher than expected. Despite this, dovish comments from the European Central Bank did weigh on the single currency

The market mood soured which meant that the US Dollar saw some good gains. However, these were soon undone during the afternoon as US inflation data was mixed, causing the Greenback to lose some of its gains.

Thursday 27th October

It was a mixed day for the pound as it started to slow down following the rally after Rishi Sunak was announced as Prime Minister. Investors were soon worried about the reappointment of Suella Braverman although the currency still benefited from some stability after the announcement of the new PM.

It was a different day for the Pound as it slumped following the European Central Bank’s decision to raise interest rates by 75 basis points. There was also a dovish approach from the ECB that saw markets scale back interest as they bet on additional rate rises.

The US Dollar made some gains following a rise in US Treasury yields and a downbeat market mood, which helped boost the Greenback. Despite this, during the afternoon, an improvement in market mood meant that appetite for the safe-haven currency wavered, causing a dent in the US Dollar.

Wednesday 26th October

The Pound continued to improve as markets continued to show more of an interest in the currency following the appointment of Rishi Sunak as Prime Minister. The Treasury announced that it would hold back on its fiscal statement, which means that markets had more confidence in chancellor Jeremy Hunt and the PM to do the right thing when it came to fiscal policy.

The Euro fluctuated as it made up ground against its weaker peers and made up for any losses elsewhere. The negative correlation with the US Dollar helped to boost the single currency although a lack of data meant that any movement was relatively limited.

Investors continued to bet on aggressive action from the Federal Reserve and that meant that the US Dollar continued to extend its losses. This came as a result of disappointing US data as well as reports that the Fed wants to slow down policy tightening.

Tuesday 25th October

The Pound soared higher as markets reacted to the likelihood that Rishi Sunak would become the next British Prime Minister. This raised hopes of stability and following the news, investors were happy with the cabinet reshuffle brought in by Sunak.

It was a mixed day for the Euro as it made gains against weaker peers but lost out elsewhere. This came as German business sentiment dropped to the lowest level seen since May 2020. However, these losses were eased thanks to the negative correlation that the single currency has with the US dollar.

The US Dollar took a fall as a risk-on mood and a drop in US Treasury yield meant that the appeal of the Greenback weakened. Along with this, poor US economic data placed further pressure on the safe-haven currency while a drop in consumer confidence also didn’t help the situation.

Monday 24th October

As it looked likely that Rishi Sunak would become Prime Minister, the Pound had a mixed day as it initially saw some success. Despite this, the currency took a turn during the afternoon as investors became worried about the economy following the worse-than-expected contraction in the services sector.

The Euro strengthened as markets prepared themselves for a strong hike in rates from the European Central Bank. The upside came, despite disappointing PMIs as the surveys indicated that business activity had contracted in Europe.

At the start of trading, the US Dollar edged higher as markets looked to take advantage of the safe-haven currency. Despite this, the market mood changed during the afternoon and poor US PMIs resulted in any gains being limited.

Currency Ranges for the week:

GBP/USD: Low: 1.12615 High: 1.16396

GBP/EUR: Low: 1.14144  High: 1.16639

EUR/USD: Low: 0.98167  High: 1.00915

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