Will the Pound rise against the Euro in October?

Will the Pound move up against the Euro?

The Pound Euro exchange rate hit its lowest level since May after the Bank of England announced that they were pausing interest rates.

However, since then the Pound has started to make some small gains as we end the week and the month.

This morning the Office for National Statistics announced that UK GDP for quarter 2 grew at 0.2%.

The other announcement was that the year on year rate was revised upwards from 0.4% to 0.6%.

Later on this morning Eurozone inflation data will be coming out at 10am.

Inflation has been a key influence in central bank policy both to the Bank of England and the European Central Bank.

Inflation has started to fall in the US, UK and Eurozone recently which has led to them all considering what to do with policy moving forwards.

Oil Prices on the rise

Oil prices have been rising dramatically over the last few weeks which is not good news as we head into winter in the northern hemisphere.

The weather still remains mild but the rising cost of oil will start to once again impact upon household bills.

Rising oil prices also affects the cost of manufacturing and production. This could be reflected in rising prices for the consumer too as we move forward.

Ultimately this could lead to inflation rising once again which could put pressure on both the Bank of England and European Central Bank to revisit monetary policy.

After 14 interest rate hikes in a row the Bank of England finally chose to keep rates on hold. This caused the Pound to briefly dip vs the Euro earlier this month.

However, since then the Pound has made some small gains vs the Euro.

If you would like a free quote when buying or selling Euros then feel free to contact me directly.

I have worked for one of the UK’s longest established currency brokers for 20 years today. Please email me directly and I look forward to hearing from you. Tom Holian [email protected]


Will the pound continue to fall? Sterling exchange rates hit multi-month lows

GBPEUR Forecast – Internal Market Bill Drives GBP Lower

Sterling finished the trading week on the back foot, closing out at 1.1480 against the Euro a four-month low since 15th May.

Unfortunately, against the dollar it was a similar story with the week closing out at 1.2235 against the Dollar a six-month low dating back to the 27th March.

The main reason for Sterling’s demise is the uncertain UK outlook from the financial markets, largely due to the economic data prints in the week.

Primarily lower than expected inflation print on Wednesday changed the outlook of Thursdays Bank of England interest rate decision. Inflation levels on Wednesday came out at 6.7% down from 6.8% but noticeably lower than the consensus forecasts of 7%.

Core inflation also declined sharply to 6.2% down from the forecasted 6.9% showing inflation is becoming less ‘sticky’ in the UK. In the earlier part of the week futures markets had Thursday’s meeting priced in at 80% chance of a hike and 20% chance of a pause, by Wednesday morning the probability had slipped to a 53% chance of a hike and 47% chance of a pause by the Bank. Thus, keeping pressure on an already faltering pound.

This data was the catalyst for Thursdays narrow 5-4 vote in favour of a pause, bring the curtain down on the Banks 14 consecutive base rate hikes from 0.1% – 5.25%. To further weaken Sterling the futures markets now price terminal rates in the UK at 5.4%, it was not long ago we had JP morgan calling for 7% base rate should the market conditions warrant it. Dankse bank have commented they now see November’s meeting also being a pause, stating the lack of significant data releases and time for considerable change to those releases (most notably wage growth and core inflation) between now and the 2nd November a key reason for the pause.

It is no surprise Dankse bank are bearish on the pound, with their six-month forecast for GBP/EUR weighing in at 1.1365. The bank are negative on the UK economy and tip it to underperform in coming months along with a less hawkish Bank of England.
Supporting the economic slowdown for the UK theory, Fridays Retail sales did little to excite the markets. A modest uptick to 0.4% growth for August, slightly under shot the 0.5% consensus.

Noticeably the year-on-year growth from August 2022 printed at 1.4%, showing the difficultly the retail sector is having. To put some context to how vital the retail sector is for the UK economy, in 2022 the total value of UK retail sales was £441bn, it contributes 5% to the UK Gross Domestic Product (GDP), roughly one third of total consumer spending goes through the sector and it employs roughly 3 million people. Its easy to see why weak figures can act as an early indication to the UK economic health.

Nevertheless, Rabobank have recently published their bullish Sterling forecast and tip rates to hit 1.1765 within a three-six month timeframe, a 2.5% upward swing from where levels finished the week. They consider a less hawkish Bank of England could benefit the pound, by strengthening the Economic profile of the country. A lower peak in rates, should soften the recessionary risk for the UK thus benefitting the pounds recent sensitivity to growth expectations.

Eurozone data shows no signs of a recovery across the continent, although there were small hints that the downturn was bottoming out. French PMI service sector data, declined to a 34-month low along with the Flash manufacturing PMI dipping to 43.6 from 46 previously. Data from Germany was mildly better with manufacturing and service PMI both showing mild positive gains against the forecasted prints.

Rabobank use the recent weak economic data sets from the bloc to further support their Bullish projections for GBP/EUR. Stating the recent revise of growth projections across the Bloc by the European Central Bank, supporting the Banks hypothesis of a technical recession in the second half of 2023 and a shallow recovery through 2024.

The Dollar has regained its strength and had a very successful weak across the board. Cable levels posted its third consecutive weekly decline, continuing its bearish trend that began mid-July. Since then, Cable levels have fallen from 1.31 to 1.2235, a 6.6% decline.

The recent strength of economic data from the US has provided the greenback with solid support, combined with recent Federal reserve comments. The FOMC kept the Fed interest rate unchanged as expected at the range of 5.25%-5.50%.

In their projections, most members anticipate that further tightening may be appropriate before year-end. They also forecasted less rate easing for the next year compared to previous expectations, so base rates in the US could be higher for longer.

Fed Chair Jerome Powell reiterated the message and tone of recent weeks and meetings, emphasising that future rate hikes are still likely if inflation rebounds and the economy continues to perform well, particularly with a tight labour market. Following the meeting, the data showed that the US labour market remains robust with initial and continuing jobless claims reaching their lowest levels since January. The US dollar index, which measures the value of the dollar against a basket of foreign currencies (Euro, Japanese Yen, Swiss Franc, Pound Sterling, Canadian Dollar and Swedish Krona) posted its 10th consecutive weekly gain, marking a record streak.

Should you have a currency exchange to carry out involving buying or selling the Pound it is more important than ever to have an experienced and proactive currency broker on your side. Feel free to contact me today on [email protected] and I will be happy to discuss the various options available to you.

Will the Pound Fall Further on Bank of England Decision and Falling Inflation?

Sterling lower after UK Inflation drops more than expected to 6.7%

The pound has dropped across the board today after UK Inflation data came in lower than expected. This is good news in one sense as the Bank of England has been trying to bring this down for many months.

Sterling has been supported by expectations of a higher interest rate in the future, with a key meeting tomorrow.

UK interest rates are much higher in the last year than in recent years, this will typically see a currency stronger.

The Bank of England was thought to have an easy decision tomorrow to hike interest rates once more, but this is less clear now.

Will the Bank of England hike UK Interest Rates tomorrow?

This is now looking like a difficult decision, with Inflation falling under its own accord.

The prospect of raising interest rates has always been a battle between controlling Inflation and seeking to prevent too much of a fall in economic growth.

The UK economy has been struggling of late, with economic growth falling more than expected. Recent economic surveys have pointed to drops in business sentiment as well, you can read about this here.

By raising interest rates too high, the Bank of England risks choking off the economic activity in the economy that is present, creating other problems.

How will the pound react in the next 24 hours?

The volatility has already begun following today’s Inflation data, and tonight is the latest US Interest Rate decision which might well prove a market mover too.

Looking at the US, the US dollar accounts for around 60% of globally traded foreign exchange. This means any shifts in the US dollar could stoke volatility in other currencies connected to it like the pound, Euro, AUD, NZD, CAD, ZAR, and many more.

Then, tomorrow is the Bank of England decision at midday, where we might well see some further volatility given the uncertainty from the interest rate decision.

With it being a near enough 50-50 split, there is real potential for a move on the pound.

Essentially, a higher interest rate could see the pound rise, whilst a pause might see sterling weaker.

Investors will closely follow the news to rebalance their positioning on all manner of investments, which could see some turbulence for the pound.

GBPEUR levels are currently 1.1550, with GBPUSD 1.2357. The pound is over two cents off a one-year high against the Euro, whilst the dollar is at its strongest against the pound since June.

If you are seeking to benefit from market movements or wish to check you have an appropriate FX strategy in place, a call with an expert like myself could prove beneficial.

I have worked in FX payments for 14 years and handled tens of thousands of transactions for both private and corporate clients. I have been quoted in newspapers and even once appeared on BBC News talking about Brexit. Feel free to ask me about that one!

Would you benefit from a free, no-obligation FX check-up? You can ensure you are getting a good rate and have properly taken stock of current events. You can also explore all of your options which can help limit your exposure to the FX markets.

Alternatively, please call 0204 506 5672 and ask to speak to Jonathan Watson.

Here is my LinkedIn profile https://uk.linkedin.com/in/jonathan-watson-46591057

Pound Sterling Forecast: How to get the Best Pound to Euro Exchange Rate

Pound to Euro rate continues to fall, making history in the process

Pound Sterling Forecast, what we can expect for the pound?

Getting the best pound to euro rate is about being prepared and tracking key economic data and information.

“Hope”, is not usually a good strategy. Relying purely on “luck” and hoping that the market will magically go your way can often lead to disappointment.

Just because you cannot totally predict the direction on rates, doesn’t mean you should just give up and accept your fate.

To help my clients get the best rates, I take the time to fully understand:

– Their timescales. How long do you have?

– Their attitude to risk. What type of volatility are you prepared to accept?

– What are your goals? Do you have a target rate or budget, how realistic is it?

It is only be being honest about the answers to the above, and analysing the latest market intelligence, you can truly devise a strategy.

What events will move my rates ahead on pound sterling rates?

Tomorrow sees the latest Eurozone Interest Rate decision, with the decision at 13.15 GMT and the Press Conference due after 13.45.

These events can see volatility in the run up to, and after the event, making being in touch with your Lumon specialist vital.

Any clients looking to consider a currency payment in the future should be aware of this potentially volatile event today, with financial markets mixed over opinions as to what we might see.

We can often see currency market movement when there is uncertainty as to which direction economic policy or data will take, and markets readjust to the fresh news.

The ECB (European Central Bank) have a hard decision between keeping interest rates on hold to encourage economic growth, versus raising interest rates to combat high inflation.

The market indications are the ECB is quite evenly split at present, opening the door to some movement on Euro levels today.

Whilst principally affecting the Euro, there is much scope for volatility influencing the pound, the US dollar and other currencies.

Any currency connected to the Euro including the Australian dollar, New Zealand dollar and Canadian dollar could be in for a ride.

What else is happening that might affect the pound this month?

The pound trading quite close to the one-year highs on GBPEUR and we have a Bank of England and US Federal Reserve Interest Rate decision next week

With the ECB due tomorrow, a conversation with a specialist could prove beneficial, to navigate the news and ensure you are making informed decisions regarding your currency transfers.

If you need to buy or sell the pound against the Euro, US dollar, Canadian dollar, Aussie dollar, Kiwi dollar or any other currency, please get in touch.

“The best way to predict the future, is to create it”

Pound Rises on ‘Higher for Longer’ Interest Rate Expectations

GBP EUR Exchange Rate: Weekly Review May 21st  

Sterling stronger as UK interest rates remain high

Sterling has been higher following a dip last week. Interest Rate expectations are setting the tone for some of the positions we are seeing so far.

The Bank of England raised interest rates as expected 25 bps last week taking UK interest rates to 5.25%. We did see Sterling dropping on the news.

Cable dropped to $1.2623, its weakest level against the dollar since late June. GBPEUR fell to 1.1565, both have since recovered.

This does highlight once again how sterling has been once again weaker following an interest rate decision to hike.

Friday saw the latest US Nonfarm Payroll data, a key factor used by the Fed in determining their pace of interest rate hikes.

This showed fewer jobs being created with 187k versus 200k than forecast but represented a trend higher in the number of news jobs from June, which was 185k.

The US unemployment rate also came down to 3.5% from 3.6%, taking the pressure off the FED a little in their quest to control inflation but also avoid hurting the US economy.

This ultimately saw the US dollar slightly weaker, which has been mildly supportive for sterling lifting cable to 1.2750, with EURUSD 1.0975 and a 1.1610 reading this morning on GBPEUR.

What are the latest FX forecasts showing us?

If we look at the latest forecast data from our sources, we can see the following on GBPEUR:

    • 13 out 52 forecasters see us Above 1.1650 =
    • 39 out 52 – Below 1.1650 =

Using this data, we can see on GBPEUR we are potentially very close to the top of the ranges.

For GBPUSD, it is more mixed, based on a spot ref of circa 1.2750. It appears that the market is fairly split on the direction of GBPUSD with a move to 1.3000 or 1.2500 fairly even. But leaning slightly to the upside.

“Higher For Longer” for UK Interest Rates

When looking at the pound and UK Interest Rates, one of the key takeaways is “higher for longer”. We expect UK interest rates will be at an elevated level for a longer period of time than previously thought.

The chances of Interest Rate hikes next month are as follows, BoE 85%, FED 16% and ECB 36%

The Bank of England are still in a difficult position trying to control UK inflation which is still very high at 7.9%

It is clear we are nearing the terminal rate with now only one or two hikes left, as the Bank of England has to wait for the full effects of the previous rate hikes to be felt in the wider economy.

In fact, there are some warning signals in the economy. We are already seeing some of the potential negative effects of higher interest rates.

Taylor Wimpey, one of the UK’s largest house builders reported profits falling by a quarter. They are blaming rising interest rates and a sluggish housing sector, plus lack of demand for new housing. Taylor Wimpey expects to build 10,000 homes this year, compared to 14,000 last year.

Wilkinson, the high street retailer is to enter administration. The higher interest rates we see places increases strains on the economy and creates the conditions where we can see weaker businesses put under extra pressure. We know about the UK cost of living crisis caused by higher rates. Weaker high street retailers going out of business is a classic warning sign of potential economic problems ahead.

This really brings into importance the key release for sterling this week, GDP figures on Friday…

If you have a transaction to consider and wish to consult an FX expert regarding the latest forecast news, please get in touch.

GBPEUR hits 11-month highs ! Will the pound keep rising ?

The pound has been rising but can this continue

Expectations for the pound to carry on rising remain fairly high in the FX markets as sterling has continued to touch fresh highs.

Against the Euro we have been comfortably in the 1.17s, and against the US Dollar 1.29. GBPEUR levels are an 11-month high and GBPUSD levels are testing 16-month highs.

The outlook for sterling has increased and improved as investors back further interest rate hikes in the future.

Typically the raising of an interest rate sees the relevant currency stronger, as it attracts further investment.

When we look at the future forecasts on interest rates, we see that markets are predicting UK interest rates over 6%.

What could destabilise sterling?

If we look further into the future, we can see a number of potential issues which could upset sterling exchange rates.

The potential for higher interest rates to trigger recession is documented as it stops spending.

This has been quite well researched and the now increased chance of interest rates hikes, makes a longer and deeper recession more likely.

In fact, when the Bank of England raised interest rates last month, the pound did fall.

Some research I had looked at regarding the pound and Bank of England interest rate decisions, did actually show that in the 24 hours following these events, the pound was lower.

So, the very thing that is causing the pound to rise in principle, is actually and could very easily cause it to fall.

Looking around the corner, we never quite know what the financial world and FX markets will deliver.

The movements we see are ultimately just a reaction to investor’s sentiment towards the ongoing news and current affairs.

For now, sterling is performing well and this is presenting an excellent opportunity for those buying Euros, US Dollars or many other currencies.

This week ahead – Are 2023’s Sterling high’s set to continue?

For the first time in 2023, we saw the Pound breach the 1.16 ceiling against the euro last week. On the 1st of June 2023 we saw a new a 2023 high reached for GBPEUR of 1.1667 with sterling managing to maintain a mid-market level of above 1.16 for the remainder of the week. The Pound saw similar rises against several currencies, most notably the Australian and New Zealand Dollar, respectively climbing to both 2- and 3-year highs.

Analysts have raised their bets on further rate hikes by the Bank of England in coming months, with the terminal interest rate for the UK now expected to rise to 5.50% by the end of this year.  A further 0.25% hike has been nailed on for June at 90% by the market after UK inflation levels remained elevated at 8.7, a far cry from the Bank of England’s target level of 2%. Current levels are 0.5% higher than the Banks expectation of 8.2% where inflation should be.  The continued interest rate rises have backed by Chancellor of the Exchequer Jeremy Hunt, stating recently that ‘even if they risk plunging the UK into recession, in order to combat soaring inflation’.

This comes in contrast to the Eurozone where inflation figures have undershot expectations with core inflation falling to 5.3%, a figure lower than the 5.5% forecasted by economists. The expectation of further rate hikes by the ECB has now decreased on the release of this data. Poor GDP figures released from Germany; a powerhouse economy of the bloc further dampened the mood earlier this week for the Euro. The expectations of a recession in Germany are now high, along with a 6-month low against the Pound, the euro is near a 3-month low versus the Dollar.

Global risk appetite over the last couple weeks has been diminishing for the US Dollar after concerns in the market that the US government would default on its debt. The borrowing limit was forecasted to be hit on the 5th of June until US congress approved a deal to lift the world’s largest economies borrowing limit on Wednesday. The Pound gained 2 cents on the Dollar over the course of last week with potential extended setbacks after Friday’s confusing jobs report out of the US. The odds of a June rate hike remain low after Friday’s report provided the Federal Reserve sufficient reasoning to pause on raising interest. The non – farm payroll report came in 159k better than the expected 180k with a figure of 339k, a continued rise after last month’s 294k. This figure provided some confusion with unemployment in the US rising to 3.7%, 0.3% up from last month and wages coming in softer. This potential weakness in the job market could hold the FED back at June’s monetary policy meeting.

The Pound is being favoured by both strategists at UBS and Credit Suisse, two of Europe’s largest banks after the Bank of England demonstrates a stronger commitment to fighting elevated inflation compared to it’s G10 counterparts.

Several data releases to look out for this week. Monday being the data heavy day for the Eurozone and US. Monday morning, we have the services and composite PMI releases for the eurozone, France, Italy & Spain. Monday afternoon we see the US ISM services PMI data released. Only the one data release for the UK with the S&P Global composite PMI released in the morning.

On Tuesday and Thursday retail sales data and GDP data is released for the Eurozone, providing a clear indicator of inflation levels for the bloc.

For the US this week we have the trade balance figures and initial job claims data on Wednesday and Thursday.

Any deviation from the expectation from the data releases can cause potential volatility and movement within exchange rates, if you have any questions, speak to one of our experts here and we will be happy to discuss any upcoming exchange with you.

Sterling Stronger as UK Inflation Remains High

Pound to Dollar Rate Drops to One-month Low

Pound reaches fresh highs against the Euro

UK Inflation data this morning showed a drop to 8.7% but this is still higher than previous Bank of England forecasts.

This leaves the door open to future interest hikes, which in principal could lead to a stronger pound.

The pound was also in the headlines again yesterday as the Bank of England faced criticism.

In terms of where interest rates are headed, the governor Andrew Bailey spoke. “I think we are nearer the peak than we were”, was his commentary in relation to how much further hikes might go.

In acknowledgement of the Banks failure to control inflation, Bailey conceded “very big lessons” were there to be learned.

The news was not all bad in yesterday’s trading. The pound rose also rose higher yesterday as the IMF confirmed the UK is no longer headed for recession.

Why has the pound been strengthening this year?

Sterling has been empowered in recent weeks as the UK shrugs off the worst forecasts.

At the turn of the year, all eyes were on a long and drawn-out recession. This has continued to look less and less likely as the year goes on.

Our latest forecasts had thrown doubt on the potential for the pound to rise higher ahead. These forecasts are now coming under pressure as further good news emerges.

Whilst government borrowing has increased in the latest figures, the rise in projected economic growth and avoidance of recession is naturally seen as a plus.

When we consider that Germany could well be headed for recession, and the US economy is also not clearly out of the woods, the pound could be looking in good shape from an investors point of view.

When is the best time to buy Euros with pounds?

Looking to the data, our latest research had indicated of 54 banks; 45 predicted the pound will be lower. Precisely, they predicted the GBPEUR level would be below 1.14 in the coming months.

Considering GBPEUR levels have reached fresh six-month highs in May, now could be a good time to lock in your rate.

Clients buying £100,000 worth of Euros are today getting an extra €4,000 compared to the lows of February.

As mentioned, our research in assessing the predictions of all the major banks indicted a much tougher time than the pound is currently experiencing.

Market sentiment is providing a boost for Euro buyers with pounds but this might not last.

There is an argument to say therefore, that given the recent movements, and the fact that market expectations predict a lower pound, now is a good time to buy.

Will the US dollar weaken on the US debt ceiling talks?

Markets have been here many time before and only a handful of times have they failed to agree a deal before the deadline.

If the government runs out of money, and they fail to make payments then we could in principal see the US dollar weaker. With so many US dollar denominated assets globally investors might become fearful.

We might also flip this around and argue that the US dollar would actually strengthen since as a safe haven currency, the US dollar will rise in times of uncertainty

Investors will be keenly monitoring the outcome here, with the familiar talk of the reliability of the US dollar as a leading global currency and how justified that label is also likely to gain column inches.

For more information on the latest GBPEUR and GBPUSD forecasts, please contact me to learn more.


[email protected]

Will the Pound strengthen this week?

The Pound reached multi-week highs last week after Chancellor Jeremy Hunt did his best at calming the markets with his Spring Budget release on Wednesday.

The capturing headline that the UK will not enter a technical recession this year’, as well as expectation of growth in the years afterwards, boosted the Pound heading into what could also be a volatile week.

The Bank of England will announce the next steps forward in terms of interest rates on Thursday, as the Monetary Policy Committee meet. Catherine Mann, one of the more hawkish members of the MPC, said recently that interest rates will need to rise again to prevent inflation becoming a persistent problem in the UK. This could be the eleventh successive rate hike since December 2021 and, with interest rates currently sitting at 4%, there is an expectation that the Bank will hike by a further 25 basis points.

Inflation remains in double digits still with the last reading displaying at 10.1%. This figure has only fallen 1% in the past 5 months and the Bank’s target level is 2%. Will we see a further hike this week and, in turn, another boost to the Pound’s value?

The Bank also had it’s say on the emergency sale of Credit Suisse to UBS, as the UK has managed so far to avoid being drawn into recent bank failures. This recent crisis has seen two major US banks fold, as well as Credit Suisse. This caused a slight shock to the market as Credit Suisse is considered as one of the top 30 largest banks in the world and large enough to affect the global markets. The BoE said “The UK banking system is well capitalised and funded, and remains safe and sound.”

The European Central Bank also did not hesitate to push forward with their interest rate hike last week despite the chaos in Switzerland. The EPC pushed their interest rates to 3.5% after another 50 basis point hike on Thursday.

After two major bank collapsed in the US over the past couple of weeks, there will be plenty of eyes on the Federal Reserve’s interest rate decision on Wednesday too. As well as the EPC, the Fed are expected to hike their rates from 4.75% to 5%, the highest of these 3 central banks. The US dollar has benefited from it’s safe haven status over the past year, so the rhetoric from the Federal Open Market Committee this week will be key to the value of the greenback moving forward.

Should you have a large currency exchange to carry out and you would like to speak to us for a comparison or a discussion about where the market may head next feel free to email me directly [email protected] I look forward to speaking with you.

Pound starts to recover against the Euro

GBP EUR Exchange Rate: The Week Ahead June 26th 

The pound managed a surprising recovery during the week to the 10th February, against the Euro the pound managed to climb 1 ¾ cents from the week opening to the week close (1.1160- 1.1330). Against the Dollar the pound managed to claw back a similar amount with the week high topping out just under the 1.22 handle.

As previously mentioned in these reports, the week prior saw a heavyweight clash from the 3 central banks, where the doubt was cast over the future of the Bank of England’s rate hiking cycle.

It appears the bank are in their ‘sunset’ phase with one more 25 basis point rise heavily tipped in next months meeting. Thus causing the pound to weaken.

Looking ahead the Chancellor Jeremy Hunt is due to present his Spring Budget on the 15th March, he has given assurances to the market he will not be pulling any rabbits from the hat next month given the need to reduce inflation.

A point worth noting is the Banks meeting is not until the week after (23rd) last time after the Truss/Kwarteng saga the bank were forced to act on emergency bailout measures to put a floor under Sterling.

Friday saw the latest round of GDP numbers out for the UK. Gross Domestic Product (GDP) is the a monetary measure of the value of all goods and services produced by a country in a specific timeframe. It is one of the key indicators of Economic growth.

December’s reading came out at 0.5% which was deeper than the forecasted 0.3%. On Friday the reading came out that the economy grew 0% in the final quarter of the year, meaning the UK avoided a technical recession by the smallest of margins.

Remember for an official recession, there needs to be two consecutive quarters of negative growth.

Nevertheless, 0% growth is not something to shout about, the data only highlights what many market analysts have mentioned around the difficulty the UK economic is expected to face in 2023. GDP in 2022 increased by 4% in the UK, down sharply from the 7.6% increase in 2021.

The pounds gains throughout the week were down to an unwinding in last week’s sharp selloff where the pound was ‘shorted’ across the money markets.

In addition, a slight shift in global investor sentiment after softer US data and communication from the Federal reserve members.

The Euro trended lower throughout the week as support for the single currency was dented by economic data.

Retail sales in the euro zone fell by 2.7% in December, lower than the 2.5% forecast. This is the biggest decline since April 2021.

On Tuesday German industrial production came in at -3.1% another heavy blow for the Euro. However, some more positive inflation data came out on Thursday as inflation dipped to 9.2% in January. Down from the 9.6% recorded in December.

This has also raised fears that the European Central Bank (ECB) may need to alter their recent hawkish tone around rate hikes.

The Eurozone has benefitted heavily from falling gas prices, with prices falling around 85% from the highs recorded in August amid lower demands thanks to a above average winter temperature across the bloc. Out look across the Eurozone has improved vastly from 3 months ago when the situation looked a lot more difficult than now.

Analysts on wall street feel the bloc is far from being in the clear as they predict a shallow recession will materialise later this year. Eyes will be focused on how economic data records in the coming months, any weakness could cap the Euros upside potential.

This upside potential and greater outlook for the Euro has been remarkable, at the start of November EUR/USD was trading around 0.97.

Today EUR/USD is trading around the 1.07 handle but has peaked as high as 1.10 at the start of this month.

As EUR/USD is the largest traded pair globally it can often suffer at the hands of booming US data releases such as the latest round of Non farm Payroll data where the Euro lost 1.5 cent on the days trading due to the positive data set.

The dollar wavered through the past week where it was intermittently bolstered by a shifting market mood.

Concerns over the Chinese Spy balloon caused initial support for the safe haven dollar on Monday.

The support didn’t last long as the Federal Reserve chair Jerome Powell gave a Dovish speech.

Powell avoided any clear indications on the banks forward planning with just one short statement on the matter, ‘ the disinflationary process, the process of getting inflation down, has begun’.

Wednesday saw a rally for the greenback after hawkish comments from Fed governor Lisa Cook who said that ‘the bank are determined to bring inflation down to target, I think we are not done with raising interest rates’.

US employment data remained historically low on Thursday, further supporting the dollar.

Global market sentiment deteriorated towards the end of the week with the Dow Jones (0.17%) and Nasdaq 100 (2.47%) both down and the FTSE falling by 0.24%.

The markets haver again began to realign themselves to what the federal reserve are planning to do with rates.

There are some suggestions traders are starting to price out US rate cuts by the end of the year following the strong Nonfarm data.

Keep a close eye on US CPI data this week, it is estimated to clock in at 6.2% down from the previous 6.5%. Any variation could cause volatility on the currency markets.

Market data this week-


Mon- Average Earnings data, claimant count and unemployment rate

Tues – CPI data & Retail price index

Fri- Retail sales


Tues GDP Q4

Weds Industrial production.


Tues- CPI data

Weds- Retail sales

Thurs- Building permits, Initial jobless claims, Philadelphia Fed manufacturing Survey

For further information or a free quote reach out to me directly Tom Holian [email protected]

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