7th November - Weekly FX Update

Top Currency Pairs Monday 7th November 04:00 UTC GBP/USD: 1.13312 (Last Week: 1.16084) EUR/USD: 0.99387 (Last Week: 0.99650) GBP/EUR: 1.13999 (Last Week: 1.16492)

Market News

Pound Sterling With the expected rise in interest rates already factored into the markets, the announced 75bps hike did little to improve the Pounds fortune last week as talk of a prolonged recession caused the UK currency to dip against both the Euro and the Dollar. The outlook for the Pound is somewhat bleak moving forward as it's now expected that interest rates are unlikely to be risen to as high a rate as previously predicted. The BoE also said on Thursday's announcement that the UK's economy would shrink for eight quarters in a row. Rishi Sunak and the finance minister Jeremy Hunt are set to announce a wave of spending cuts and tax raises to tackle UK debt, which investors will keep a keen eye on.

Euro It was a positive week for the Euro against the Pound and the Dollar. News of a long-term recession looming for the British economy saw the euro return below 1.15, having reached heights of 1.167 in previous weeks. The Euro is also back to near parity with the Dollar having seen a slight raise from the beginning of last week. How well the Euro can continue to perform will be dictated by the fallout from the Ukraine war with supply chains to Europe's biggest economy Germany affected. Fears of a recession still loom large with factory orders in Germany said to have fallen -4% month on month.

U.S. Dollar Friday's non-farm payrolls report showed more jobs were created than previously expected, however the report also highlighted lower wage inflation and a higher unemployment rate. Initially, off the back of this data the Dollar rose, but this soon reversed and began to fall as the report lent weight to the view that the Federal Reserve could slow the pace of future rate increases. The release of key U.S inflation data on Thursday will potentially reveal more about the Federal Reserve's plans around interest hikes in December. The upcoming midterm elections on Tuesday will also be of interest as the results could carry political consequences for Joe Biden's control of congress and future plans as President.

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