Top Currency Pairs Tuesday 30th August 04:00 UTC GBP/USD: 1.17013 (Last Week: 1.18292) EUR/USD: 0.99989 (Last Week: 1.00424) GBP/EUR: 1.17025 (Last Week: 1.17792)
Market News
Pound Sterling The Pound slumped last week as the UK balances a recession amid skyrocketing energy prices. It held up well until Federal Reserve Chairman Jerome Powell prompted widespread selling of riskier assets as the Fed gear up to hike interest rates further, leaving GBP extremely vulnerable to the safe haven USD. PMI prints were also poor last week which did not help. The next prime minister will be announced on Monday, with the race finally coming to an end this Friday as the ballots will be counted over the weekend. Liz Truss is expected to win, and will quickly face a raft of issues currently gripping the UK economy.
Euro The EUR/USD traded below parity for much of last week as Europe continues to suffer from its energy woes. Nord Steam 1 is expected to shut from August 31st to September 2nd which will further pressure the crisis. Looking ahead, Eurozone inflation will be released tomorrow which investors will be keeping a close eye on, along with European Central Bank commentary. Some policymakers hinted at a 50 bps interest rate hike in September and potentially more, and inflation data will need to be supportive for this outcome to become more likely.
U.S. Dollar The US Dollar rallied last week after Federal Reserve Chairman Jerome Powell confirmed further interest rate hikes in an effort to bring down inflation. Powell exclaimed that companies and households will face a growing struggle as the bank continues its aggressive path, despite July's lower inflation readings. It was also noted that even though there are clear signs of an economic slowdown, it would not stop the Federal Reserve. Besides the speech, it was a relatively slow week for the USD, and all eyes will now be on the non-farm payroll figures released Friday. A good number will see a consolidation of Dollar strength.
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