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26th September - Weekly FX Update

Updated: Oct 3, 2022

Top Currency Pairs Monday 26th September 04:00 UTC GBP/USD: 1.05042 (Last Week: 1.14346) EUR/USD: 0.96376 (Last Week: 1.00301) GBP/EUR: 1.09056 (Last Week: 1.14003) If you would like to book in a forward contract to reduce market volatility, please speak with your account manager or contact the team at +44 20 3908 4662 -

Market News

Pound Sterling GBP sustained heavy losses last week and could fall further in search of a happier equilibrium. After announcing a new budget and economic plan, the UK government has almost certainly confirmed a large increase in debt. Investors feel Kwasi Kwarteng's plans will cause damage in the future and is not sustainable. Kwarteng added comments over the weekend which further spooked the markets. When you couple this with the Bank of England (BoE) only raising interest rates by half a percent to 2.25% last week, there is a feeling of fear that both the Government and BoE are making the incorrect choices as the BoE are once again showing that they are behind the curve in comparison to other central banks. The week ahead will continue its volatility, and markets can swing wildly off the back of comments from members of the BoE or politicians.

Euro GBP/EUR broke below 1.10 in overnight trade, after previously falling from the 1.14 level on Friday. Many economists expect that if the rate were to go lower, 1.07 is where it could bottom out after the Euro took its cues from other central banks and governments last week. Against the USD, the European currency once again fell below parity and even further this time, heading towards 0.96 which is largely attributed to the Dollar's safe haven status and aggressive Federal Reserve rate hikes. Looking ahead, the European calendar is relatively sparse, with unemployment rate figures on Friday with a slew of flash forecasts. Christine Lagarde is also set to speak today as investors will hope to see further indications for their next move on interest rates and tackling inflation.

U.S. Dollar The Dollar continued its bullish position last week after opening against the Pound with a dramatic fall to new all-time lows amidst a fresh onslaught from the greenback. The gains came for the Dollar against the Pound, Euro, and other major currencies as global stock markets slumped, confirming safe-haven demand being a key driver for the U.S. Dollar's appreciation. The Federal Reserve also hiked interest rates by 75bps as they continue in their exploit to raise rates faster than elsewhere, going on to warn that further tightening would be needed to quell inflation. In the week ahead, Friday will see Core PCE Price Index, which will be the highlight for the week as this is considered the Fed's preferred measure of inflation. FOMC members will also be speaking publicly ahead of the announcement which will likely make the Dollar sensitive.

If you require alternative currency pair updates, please get in touch and we can arrange for a personalised weekly newsletter. For other FX enquiries, or to book a demo, please call us on 020 3908 4662, or email us at Disclaimer: This is not investment advice; it is for informational purposes only.


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