Friday 1st July – Reaching new multi-week lows, the Pound plunged as the economic woes continued to cause problems for the currency. Manufacturing PMI came in lower than expected and the latest consumer credit data showed that the cost-of-living crisis is impacting disposable income.
It was a good start for the Euro as it edged higher as a result of inflation exceeding forecasts. With inflation continuing to rise, it’s looking likely that the European Central Bank will need to take a different approach. However, pressure was placed on the single currency as the US Dollar surged, causing a negative correlation.
The US Dollar almost reached multi-year highs as it surged, following concerns that a global recession could hit, making the Greenback an appealing prospect for investors. Align with this, strong rate rises from the Federal Reserve helped to support the currency.
Thursday 30th June -The Pound dropped initially as a downward change to the final business investment figures placed pressure on the currency. Despite this, the Pound managed to recover during the afternoon even though there was no clear driver for the change in fortune.
The Euro dropped to two-week lows as investors were concerned that a second debt crisis was on the horizon. With imminent interest rate rises, borrowing costs in many different European countries have divided. Despite this, concerns were eased as the ECB will purchase bonds from countries with debt to limit yield spreads.
The US Dollar nudged higher at the start of the session as a downbeat market mood helped to enhance the appeal of the Greenback. However, gains were soon lost as a softer-than-expected US inflation hit the currency.
Wednesday 29th June -Investor concerns around the future of the UK economy caused the Pound to slide during trading. Along with this, the currency was also hit by comments from the Bank of England which hinted that there could be a slow approach to raising rates while it also claimed that the economy is already cooling.
The Euro ticked upwards early during trading but it soon turned downwards as markets reacted to comments from the European Central Bank. Inflation in Spain jumped by 1.2 percentage points while Germany was showing more of a mixed picture, leaving the single currency under pressure.
Following comments from the Federal Reserve, the US Dollar strengthened during trading as it indicated that rising inflation was more of a concern than a slow in growth. This suggested that the US economy is strong enough to handle rate increases.
Tuesday 28th June– The Pound dropped against many of its peers as investors were concerned about the impact that the Northern Ireland Protocol could have on the currency. This could trigger a trade war with the EU while a summer of discontent also placed pressure on the Pound as inflation races ahead of wage growth.
Even hawkish comments from the European Central Bank could not stop the Euro from slipping. It was indicated that a sharper rate rise could be seen in September and more increases following that. As a result, the negative correlation with the US Dollar only added to the pressure.
The US Dollar lost ground against many peers after the currency was hit by a bullish market mood. Despite this, an increase in US Treasury bond yields gave the safe-haven currency a boost, helping it to recover losses.
Monday 27th June – Domestic worries undermined a risk-on market mood and this caused the Pound to fluctuate. There are fears that the UK could end up in a UK-EU trade war as a result of the Northern Ireland Protocol Bill while criminal barristers decided to strike which added to the woes of the train strikes that took place the week before.
It was a strong day for the Euro as the single currency took advantage of a negative correlation with the weaker US Dollar. Along with this, the upbeat market mood of European investors also helped to give exchange rates a boost.
The US Dollar took a fall as trading sentiment improved and the bullish market mood was boosted by better-than-expected US Durable goods orders which added pressure to the Greenback.
Currency Ranges for the week:
GBP/USD: Low: 1.19855 High: 1.2307
GBP/EUR: Low: 1.15262 High: 1.16787
EUR/USD: Low: 1.0374 High: 1.06114