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31st October - Weekly FX Update

Updated: Nov 7, 2022

Top Currency Pairs Monday 31st October 04:00 UTC GBP/USD: 1.16084 (Last Week: 1.13110) EUR/USD: 0.99650 (Last Week: 0.98374) GBP/EUR: 1.16492 (Last Week: 1.14961)

Market News

Pound Sterling It was a positive week for the pound against the Euro and Dollar as Rishi Sunak started his first week as UK prime minister. Jeremy Hunt is set to continue his role as chancellor, giving the UK a feeling that the recovery of the country's economy is top of the agenda. The markets have certainly backed this notion as the Pound gained against the USD from 1.13 at the beginning of the week to just over 1.15 by close of play on Friday. The Pound enjoyed a similar margin of success against the Euro, starting the week at 1.149 and finishing up 1.165 on Friday although some of this success could be attributed to the reaction to the interest hike announced by the ECB on Thursday. This Thursdays BOE meeting will more than likely determine what sort of success or a lack thereof, the Pound has against the major currencies during the week ahead.

Euro As expected, the ECB announced a 75 bp interest rate hike on Thursday, however the reaction to this from investors and speculators carried a Dovish tone. This paved the way for further losses to the Pound and a slight drop off in the successful start to the week made against the Dollar, having peaked slightly above parity midweek to finish up just under on Friday at 0.996. All eyes will be on the interest rate decisions made by the Federal Reserve on Wednesday and the Bank of England on Thursday, with both expected to hike interest rates by 75 bps. How this is interpreted by investors and speculators could shape how the Euro performs against both currencies this week.

U.S. Dollar The USD has seen losses against the Pound and the Euro in recent weeks and depending on how the expected interest hike is received on Wednesday will determine how the Dollar performs this week. Another potentially significant event this week in the US comes on Friday with the Non-Farm payroll data being released. This is the measure of people in non-agricultural employment used to assess the health of the economy in the US. The fallout from Friday's data release could prove significant in either direction for the Dollar as it has proven to be quite significant when released in previous years.

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