11th October - Weekly FX Update

Top Currency Pairs (Monday 11th October 9:00 UTC):

GBP/USD: 1.36447 (Last week: 1.35588)

EUR/USD: 1.15718 (Last week: 1.16132)

GBP/EUR: 1.17914 (Last week: 1.16753)

Market News:

Pound Sterling

Last week, the UK saw house prices hit a record high, experiencing its fastest monthly rate increase since 2007. Halifax provided data showing the average price of a home rose to £267,587, while noting that tapering stamp duty holiday was a big contributing factor, alongside low borrowing costs. On the other hand, fuel and energy problems in the UK eased, while Europe deals with record high energy prices. As supply chain issues continue to pressure UK inflation, the Bank of England continue to convey its hawkish message, with interest rates potentially rising before the end of the year. Tightening monetary policy sooner rather than later would be bullish for GBP.

Euro

Key news for last week was the European Central Bank (ECB) minutes revealed that policymakers considered a bigger reduction last month for asset purchases, while also discussing a brand-new bond buying programme which will take hold next year. The Bank of England are likely to act first in tightening monetary policies, which seems to be seriously weighing on the Euro as the GBP/EUR rate pushes yearly highs. Against USD, the Euro has seen a very slight uptick after poor US labour market news and is looking to regain some losses it has seen in previous weeks.

U.S. Dollar

The big news last week for the Dollar was US Nonfarm Payrolls, which came in at 194,000. This was severely lower than the expected figure of 500,000 and will complicate a potential bond tapering decision by the Fed. In the last monetary policy meeting, Jerome Powell (Fed Chair) made it clear that ‘a reasonably good employment report’ would be needed in September. The unemployment rate did fall to 4.8% which somewhat lightened the mood.

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Disclaimer: This is not investment advice; it is for informational purposes only.