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17th October - Weekly FX Update

Top Currency Pairs Monday 17th October 04:00 UTC GBP/USD: 1.12327 (Last Week: 1.10789) EUR/USD: 0.97333 (Last Week: 0.97368) GBP/EUR: 1.15332 (Last Week: 1.13783) Market News

Pound Sterling The Pound continued its fight back from its nightmare slump caused by the mini budget set out by Kwasi Kwarteng in late September. A series of U-turns on the majority of the proposed plans has supported the Pound, even if it at first caused a temporary sell off of GBP with many investors likely avoiding the uncertainty. With the new appointment of Jeremy Hunt as chancellor, he scaled back the energy bill support scheme and reversed nearly all of the mini budget. This has given the Pound some tailwind with seemingly greater confidence in the government. The Pound will look to these developments for continued support in the weeks ahead, after gaining almost 4% on the Dollar and 2% on the Euro over the last 7 days.


Euro It was a week of consolidation for the Euro against the Dollar, settling around the 0.97 mark. The Euro fared worse against the Pound, opening around 0.877 at the beginning of the week and closing around the 0.869 mark. Continued escalations in the Russia-Ukraine war and the knock-on effect it has on the energy crisis leaves a continually bleak outlook for the Euro. It's a fairly quiet week on the economic calendar, however Wednesday we will see the final inflation report for September which is expected to raise from 9.1% to 10% year on year. The ECB are set to announce their monetary policy on the 27th of October so investors will be keeping a keen eye on any rhetoric beforehand.


U.S. Dollar The Dollar held its position against the Euro last week but let up some ground against the Pound. The GBP/USD will be heavily directed by UK politics in the weeks ahead, as Liz Truss's position as Prime Minister could come under threat which would cause massive uncertainty in the markets. The ECB will also be looking to make interest hikes which should be a key driver of the EUR/USD over the coming weeks. The Eurozone is heading for a recession, with many expecting the currency pair to stay lower after it first broke parity a few months ago. The USD is being pressured by a combination of factors but stays supported with hawkish Fed expectations and its safe haven status.


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