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3rd October - Weekly FX Update

Top Currency Pairs Monday 3rd October 04:00 UTC GBP/USD: 1.11166 (Last Week: 1.05042) EUR/USD: 0.98048 (Last Week: 0.96376) GBP/EUR: 1.13378 (Last Week: 1.09056) 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 The Pound rebounded last week following on from positive UK economic data and Bank of England intervention into the debt market to buy gilts which buoyed UK yields. This should hopefully continue to support the Pound in the week ahead. The rate recovery was also aided by the ONS on Friday, following the announcement of an upward revision to its estimate of Q2 GDP growth, meaning the UK avoided a technical recession last quarter. This week, early this morning the government made a U-turn on the controversial 45p tax rate which gave the Pound further relief. Kwasi Kwarteng stated, "We get it, and we have listened", and have now narrowed their focus on delivering the major parts of their growth package including an Energy Price Guarantee. The announcement was important in a week where the calendar offers little in terms of UK economic data. There is still significant downside risk to GBP, so if you are looking to sell GBP in the near future, please speak with an account manager about locking in a forward contract.

Euro The European Central Bank is expected to respond to Eurozone inflation which hit a new high for the eleventh consecutive month, accelerating from 9.1% in August to 10% in the year to September. These figures call for bigger rate rises coming out of Europe to slow price growth as Russia continue to squeeze gas supplies to Europe, leading to European governments being forced to intervene by spending billions to shield businesses from the fallout. Nevertheless, the Euro was unsupported by this data and lost ground to both the Pound and Dollar on Friday, confirming that short-term interest rate differentials might not have the same effect on the Euro as it has in the past. The European economic calendar is devoid of any major events this week so will look to external factors for movements.

U.S. Dollar After another tumultuous week in the financial markets, the Dollar dropped over the last few days in the wake of the Bank of England intervened in the gilt market and the Peoples Bank of China (PBOC) provided a degree of relief by supporting the Renminbi. However, the underlying drivers of the Dollar's strength remain intact as the Fed officials continue their hawkish approach to tackling inflation on top of its safe haven bid. The correction against USD may continue in the short-term, but both the UK and European economies are in turmoil and Dollar strength is expected to continue through to 2023. In the week ahead we will see employment data on Friday which should be the highlight of the week.

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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