Friday 30th August – The pound (GBP) traded within a narrow range at the end of last week, with no significant UK economic data releases to influence its direction.
The euro (EUR) weakened on Friday after the Eurozone’s latest consumer price index was released. The preliminary figures for August showed inflation slowing to 2.2%, the lowest in three years, down from 2.6%. This data reinforced expectations of a rate cut by the European Central Bank this month, leading to a decline in EUR exchange rates.
The US dollar gained ground as last week ended, despite the US core PCE price index, the Federal Reserve’s preferred measure of inflation, coming in below forecasts. The ‘greenback’ was buoyed by an increase in US personal spending, which alleviated concerns about a potential recession and reduced expectations for a more aggressive 50bps rate cut from the Fed this month.
Thursday 29th August
The pound (GBP) edged lower as attention shifted to UK Chancellor Rachel Reeves’s upcoming budget. Sterling weakened amid speculation on how anticipated tax and spending cuts could influence the government’s efforts to stimulate economic growth.
The euro (EUR) faltered on Thursday after German inflation unexpectedly dropped in August, falling from 2.3% to 1.9%, the lowest since March 2021. This overshadowed a better-than-expected Eurozone economic sentiment report from earlier in the day.
The US dollar strengthened yesterday, buoyed by the latest US GDP figures. The revised estimate showed second-quarter growth increasing from 2.8% to 3%, driven by a boost in consumer spending, according to the US Bureau of Economic Analysis.
Wednesday 28th August
The pound (GBP) declined significantly on Wednesday due to a negative market sentiment that weighed on Sterling. GBP also faced some profit-taking following its recent strong gains over the past few weeks.
The euro (EUR) weakened partly due to its inverse relationship with the US dollar (USD). Expectations that the European Central Bank (ECB) might implement additional rate cuts before the year’s end further pressured the EUR.
The US dollar surged on Wednesday as investors gravitated towards the safe-haven currency amidst a cautious market atmosphere. The dollar’s rebound was bolstered by market participants buying in after the USD had fallen to multi-month lows the previous week.
Tuesday 27th August
The pound (GBP) rose steadily throughout the session, with investors appearing undeterred by Prime Minister Kier Starmer’s warning that the upcoming Autumn Budget will be challenging. Sterling’s gains were likely bolstered by recent remarks from Bank of England (BoE) Governor Andrew Bailey, which have eased expectations of a BoE interest rate cut.
The euro (EUR) encountered obstacles on Tuesday as disappointing economic data from Germany underscored difficulties for the Eurozone’s largest economy. The figures included an unexpected drop in consumer confidence for September and confirmation that the German economy contracted in the second quarter.
The US dollar (USD) weakened during the session, as a cautiously optimistic market mood reduced demand for the safe-haven currency. However, losses were partially offset by a surprising increase in the latest CB consumer confidence index.
Friday 23rd August
The pound (GBP) finished last week strong, buoyed by Thursday’s robust UK PMI data. This supported expectations of a split in policy between the Bank of England (BoE) and the Federal Reserve in September, with the BoE likely holding rates steady while the Fed starts to cut.
The euro (EUR) fell on Friday, weighed down by a risk-on sentiment that dampened demand for the safe-haven currency. However, the euro’s inverse relationship with the US dollar helped limit the decline in EUR exchange rates.
The US dollar plunged at the close of last week, reacting to Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole symposium. The dollar weakened as Powell acknowledged that inflation is on a stable trajectory towards 2%, signalling it may be time for the bank to adjust its monetary policy.
Thursday 22nd August
The pound (GBP) surged yesterday as investors reacted positively to better-than-anticipated PMI data from the UK. The strong growth in the UK’s private sector this month boosted Sterling’s outlook, reducing speculation about a potential interest rate cut by the Bank of England (BoE) in September.
The euro (EUR) experienced pressure on Thursday due to mixed PMI results from the Eurozone. Although service sector growth exceeded expectations, this increase was largely attributed to the temporary boost from the Olympics in France. Meanwhile, the manufacturing sector’s growth hit an eight-month low in August.
The US dollar (USD) gained traction on Thursday following a surprising uptick in US service sector growth reported by the latest PMI figures. Additionally, the ‘greenback’ received further backing amid a cautious mood as the Federal Reserve’s annual Jackson Hole symposium commenced.
Wednesday 21st August
The pound (GBP) edged up on Wednesday, even with data revealing UK government borrowing was double the anticipated amount last month. This unexpected spike in borrowing fueled concerns that Chancellor Rachel Reeves might introduce tax hikes and spending cuts in her upcoming October budget.
The euro (EUR) showed little movement yesterday due to a lack of significant Eurozone economic updates. However, the euro’s inverse relationship with the US dollar (USD) provided some support for the single currency later in the day.
The US dollar (USD) continued its decline on Wednesday. The initial drop came after a surprising downward revision to US nonfarm payrolls for the period between April 2023 and March 2024. The release of minutes from the Federal Reserve’s recent policy meeting further exacerbated the dollar’s losses, as they strongly suggested a possible interest rate cut in September.
Tuesday 20th August
The pound (GBP) gained ground, buoyed by positive economic outlooks for the UK. Investor confidence was bolstered by signs of economic strength and the stability anticipated from the new Labour government, which is expected to attract increased investment.
The euro (EUR) dipped on Tuesday, as the prevailing risk-on sentiment reduced demand for this safe-haven currency. Despite the release of the latest Eurozone consumer price index showing accelerated inflation in July, which stirred speculation about a potential interest rate cut by the European Central Bank (ECB) next month, the euro’s decline persisted.
The US dollar (USD) remained under pressure throughout Tuesday, hitting new multi-month lows. The currency’s weakness was driven by ongoing expectations for Federal Reserve rate cuts and a positive market sentiment, which diminished the dollar’s appeal as a safe-haven asset.
Monday 19th August
The pound (GBP) moved within a narrow range as investors adjusted their expectations for a possible interest rate cut by the Bank of England (BoE) next month. Despite a series of mostly positive UK economic reports last week, they did not shift the prevailing view of imminent back-to-back rate reductions by the BoE.
The euro (EUR) remained relatively stable during the session, with demand for the safe-haven currency muted due to a positive market sentiment. Additionally, the lack of significant Eurozone data provided little impetus for EUR trading on Monday.
The US dollar (USD) fell at the beginning of the week, reaching new multi-month lows against several currencies. The latest decline in the dollar was linked to comments from Federal Reserve official Mary Daly, who advocated for a gradual reduction in US interest rates, citing signs of controlled inflation.
Friday 16th August
The pound (GBP) saw initial gains on Friday, driven by a 0.5% increase in UK retail sales for July. Nevertheless, Sterling gave up much of its advance later in the day as some investors took profits from the currency’s significant rebound earlier in the week.
The euro (EUR) showed little direction at the end of the week, with a lack of impactful Eurozone data leaving the currency without clear momentum. The prevailing risk-on sentiment contributed to the euro’s erratic performance, as it fluctuated against various counterparts.
The US dollar (USD) dropped on Friday, influenced by a risk-on market environment and falling US Treasury yields. While an unexpectedly high rise in US consumer sentiment in the afternoon helped moderate the dollar’s decline, it was unable to fully recover its losses.
Thursday 15th August
The pound (GBP) gained some traction yesterday following a robust 0.6% growth in the UK economy for the second quarter. Despite this, Sterling’s advance was capped as the weaker inflation data from Wednesday continued to fuel speculation that the Bank of England (BoE) might lower interest rates again next month.
The euro (EUR) struggled yesterday, with demand for the currency waning as risk appetite increased. The euro faced additional pressure later in the day due to a notable rise in the US dollar (USD), exacerbating the euro’s decline due to its strong inverse relationship with the American currency.
Initially, the US dollar (USD) softened as the positive market sentiment reduced its appeal as a safe haven. However, a stronger-than-expected 1% increase in US retail sales for July led to a rebound in the dollar in the afternoon. Despite this, the prevailing risk-on sentiment continued to limit the dollar’s gains against some of its counterparts.
Wednesday 14th August
The pound (GBP) dropped yesterday after the UK’s consumer price index came in below expectations, rekindling speculation about additional interest rate cuts by the Bank of England (BoE) this year. Although headline inflation increased from 2% to 2.2% in July, it fell short of the anticipated 2.3%. Core inflation also declined more than expected, and services inflation, a crucial metric for the BoE, showed signs of easing.
The euro (EUR) gained strength yesterday, benefiting from its inverse relationship with a weakening US dollar (USD). New Eurozone data had little effect on the euro’s performance, despite an unexpected decline in industrial production, as the second-quarter GDP growth estimate matched preliminary results.
The US dollar (USD) faced difficulties yesterday, with the US dollar index – which tracks the USD against a range of currencies – hitting a new seven-month low. The dollar’s decline appeared to result from investors shifting away from the currency ahead of the latest US CPI figures. As anticipated, the data indicated a slowdown in US inflation, bolstering expectations for further Federal Reserve rate cuts in the near future.
Tuesday 13th August
The pound (GBP) surged yesterday as better-than-expected UK employment figures tempered speculation about multiple interest rate cuts from the Bank of England (BoE) this year. Unemployment in the UK unexpectedly dropped from 4.4% to 4.2% for the three months ending in June, and wage growth slowed less than anticipated during the same period. This robustness in the UK labour market lent support to GBP.
The euro (EUR) encountered difficulties on Tuesday following a sharp drop in Germany’s economic sentiment index, which fell from 41.8 to 19.2 this month. Despite this decline, the euro managed to limit its losses and even gained ground against some currencies, benefiting from its strong inverse correlation with a weakening US dollar (USD).
The US dollar (USD) faced downward pressure yesterday as a cautiously optimistic market mood reduced its appeal as a safe-haven asset. Additional setbacks came later in the session with a larger-than-expected decrease in US producer prices, which intensified speculation that inflation in the US is easing.
Monday 12th August
Hawkish remarks from Bank of England (BoE) policymaker Catherine Mann did little to boost the pound (GBP) yesterday, which remained subdued against most major currencies. Mann warned that the recent drop in headline inflation should not distract from persistent price pressures in the services sector. Despite this, the pound’s movements were limited as investors awaited upcoming key economic data.
The euro (EUR) traded within a narrow range yesterday, lacking direction due to a dearth of significant Eurozone economic updates. Additionally, a cautiously optimistic market sentiment restrained the euro’s movement.
The US dollar (USD) softened yesterday as a risk-on market sentiment reduced its appeal as a safe-haven asset. The currency also faced pressure from a slight dip in US Treasury bond yields, further contributing to its decline.
Friday 9th August
The pound (GBP) remained steady on Friday, unable to establish a clear direction due to a lack of significant UK economic data. With no strong fundamental influences, the pound fluctuated widely against its peers amid a mixed market sentiment.
The euro (EUR) also experienced erratic movement on Friday, influenced by a tepid market atmosphere. Germany’s final inflation figures had minimal effect on the euro, as they matched preliminary estimates.
The US dollar (USD) appeared to stabilise towards the end of last week, as the earlier volatility in the markets subsided. Although the shifting market conditions caused some fluctuations in the ‘greenback’ against various currencies, its movements remained relatively contained.
Thursday 8th August
The pound (GBP) recovered slightly yesterday after hitting multi-month lows against several currencies. Following a selloff earlier in the week, Sterling appeared to find some support as investors took the opportunity to buy the oversold currency.
The euro (EUR) faced challenges due to its strong inverse relationship with the US dollar (USD), with the euro declining as the USD gained traction. The single currency also struggled to find support amidst a more positive market sentiment.
The US dollar (USD) found some strength against certain rivals after the latest US initial jobless claims came in lower than anticipated, alleviating concerns about the US labour market. Nonetheless, the ‘greenback’ faced pressure from a risk-on environment, leading to difficulties against more speculative currencies.
Wednesday 7th August
The pound (GBP) was influenced by market sentiment yesterday due to a lack of UK data. The currency appreciated against safer assets but weakened against riskier ones. Persistent expectations that the Bank of England (BoE) might implement two additional rate cuts by the year’s end continued to cap the pound’s gains.
Despite a stronger-than-expected rebound in German industrial production for June, the euro (EUR) remained under pressure. The positive data was overshadowed by a rising risk appetite, which diminished the euro’s appeal as a safe-haven currency.
The US dollar (USD) declined yesterday as market conditions stabilised after the earlier global selloff. The improving market mood reduced demand for the safe-haven dollar. Nonetheless, reduced speculation about an imminent emergency interest rate cut by the Federal Reserve helped temper the dollar’s losses.
Tuesday 6th August
The pound (GBP) experienced downward pressure yesterday as investors factored in the likelihood of two additional interest rate cuts from the Bank of England (BoE) this year. Compounding this, ongoing riots in the UK tarnished perceptions of political stability, further dampening interest in Sterling.
The euro (EUR) showed mixed movements during the session due to conflicting economic data. While Germany’s factory orders significantly exceeded forecasts, indicating a strong recovery in June, a larger-than-expected decline in Eurozone retail sales countered this positive development.
The US dollar (USD) remained volatile yesterday amidst continued global market turbulence. Although the dollar recovered some of its recent losses, a slight improvement in market sentiment and speculation about forthcoming Federal Reserve rate cuts exerted pressure on the currency.
Monday 5th August
The pound (GBP) drifted lower yesterday as a global market selloff intensified expectations of two additional interest rate cuts from the Bank of England (BoE) this year. Investor anxiety led to reduced interest in the increasingly volatile UK currency, despite an upward revision to the finalised British services PMI.
The euro (EUR) gained strength yesterday, benefiting from a risk-off market sentiment and its negative correlation with a weakening US dollar (USD). Additionally, the euro was supported by a stronger-than-anticipated producer price index, with Eurozone wholesale inflation increasing by 0.5% month-on-month in June.
The US dollar (USD) experienced considerable volatility yesterday, briefly hitting a seven-month low before recovering some ground amidst global market fluctuations. Investor concerns following last Friday’s payroll data raised fears of a potential US recession, and speculation about a possible emergency rate cut by the Federal Reserve added further pressure on the dollar.
Friday 2nd August
The pound (GBP) struggled on Friday as the effects of the Bank of England’s (BoE) recent interest rate cut weighed on Sterling. Nonetheless, GBP managed to recover some ground following hawkish remarks from BoE Chief Economist Huw Pill, one of the four policymakers who favoured keeping rates steady.
The euro (EUR) gained on Friday, benefiting from its strong negative correlation with a declining US dollar (USD). A risk-off market sentiment further supported the euro, enhancing its appeal as a safer asset.
The US dollar fell sharply towards the end of the week after a disappointing non-farm payrolls report increased expectations for an upcoming Federal Reserve rate cut. The US economy added only 114,000 jobs in July, falling short of the 175,000 forecast, while June’s figures were revised downward from 206,000 to 179,000.
Thursday 1st August
The pound (GBP) fell to multi-week lows yesterday as investors started to anticipate a forthcoming interest rate cut from the Bank of England (BoE) at its next policy meeting. Although the BoE did reduce rates by 25 basis points as expected, Sterling rebounded from its lowest levels. Four out of nine BoE policymakers opted to keep rates unchanged, and the policy statement hinted that further cuts might be delayed.
An unexpected rise in Eurozone unemployment put pressure on the euro (EUR), causing it to weaken against stronger currencies. Additionally, the euro was further impacted by a stronger US dollar (USD), reflecting its inverse relationship with the greenback.
The US dollar gained ground yesterday, recovering from earlier losses following the Federal Reserve’s rate decision on Wednesday evening. The dollar’s strength was bolstered by a risk-averse market environment, with weak manufacturing data from China and ongoing tensions in the Middle East dampening investor risk appetite and driving safe-haven flows into the USD.
Currency Ranges for the month:
GBP/USD: Low: 1.268 High: 1.3261
GBP/EUR: Low: 1.16031 High: 1.19027
EUR/USD: Low: 1.0787 High: 1.12095