Weekly Report – 26th September – 30th September 2022

Friday 30th September – At the end of the week the Pound took a fall as the government refused to publish the latest forecasts from the Office of Budget Responsibility. This weighed heavily on the currency and meant that even the publication of the latest GDP figures which showed a growth of 0.2% could not lift the Pound.

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It was a similar story for the Euro which trended lower during trading as it reacted to news that Russia illegally annexed parts of Ukraine. Furthermore, it was also reported that inflation in the Eurozone also reached new highs of 10%.

The US Dollar rallied after investors moved to the safe-haven currency. Despite this, the US Dollar was not able to consolidate these levels which meant that it didn’t make the gains that were expected.

Thursday 29th September

The Pound surged higher, making up for the losses it experienced after the mini-budget. This rally seemed to have been underpinned by news that the Bank of England was buying long-dated government bonds as a way of stabilising the market and it seemed to help.

It was also a strong day for the Euro as it benefited from strong CPI figures from Germany which helped to boost expectations that more hawkish action would be taken by the ECB.

It was a day of contrast for the US Dollar as it nudged lower due to a lack of support, even though there was a risk-off mood. This drop was put down to news that the US had slipped into a technical recession after figures showed that GDP figures contracted for the second quarter in a row.

Wednesday 28th September

There was a lot of volatility surrounding the Pound as it dropped by around 1.5% against a number of its peers although it did manage to make up for some of those losses. This movement was a result of the Bank of England taking action to try and stabilise the markets by purchasing government gilts.

It was a mixed day for the Euro although it was boosted by a weak US dollar as a result of a negative correlation. Despite this, concerns around the Ukraine invasion put pressure on the single currency.

A bullish market mood made things difficult for the US Dollar as its appeal was dampened while this wasn’t helped by a drop in US Treasury yields, adding to the woes of the Greenback.

Tuesday 27th September

The Pound was fairly subdued as the UK markets took time to deal with the volatility that came as a result of the upcoming fiscal plans from the government. There was also a lack of development between the Bank of England and the government and that caused the Pound to move in a narrow range.

It was a mixed day for the Euro as the Ukraine war kept investors concerned, all of which offset an upbeat market mood. In addition to this, large gas leaks were detected in the Nord stream pipelines and this caused the single currency to struggle.

The US Dollar was relatively quiet during trading as an improvement in the market mood meant that the currency retreated further. Despite this, it did slightly improve as risk sentiment changes, providing some support to the currency.

Monday 26th September

The Pound reached an all-time low against the US Dollar overnight but as the day progressed, the currency managed to claw its way back. Investors remained shaken by the mini-budget from the government which would see UK borrowing reach significant levels.

The Euro fluctuated as it firmed against its weaker peers while facing challenges elsewhere following news from the ECB that rate rises are imminent. The ECB also announced that it expected economic activity to slow in the coming months

The US Dollar moved higher as it benefited from a risk-off market mood which helped to give the Greenback a boost. Along with this, hawkish comments from the Federal Reserve also helped to push the currency higher.

Currency Ranges for the week:

GBP/USD: Low: 1.05496 High: 1.12227

GBP/EUR: Low: 1.10403  High: 1.14065

EUR/USD: Low: 0.954225  High: 0.98445

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