Home Daily Commentaries Twas the last night for the markets before Christmas

Twas the last night for the markets before Christmas

Daily Currency Update

Sterling edged up against the US dollar and Euro this morning in thin trading conditions ahead of Christmas. A bit like Macauley Culkin's character in Home Alone, the markets find themselves rather isolated at this time of year, with a number of leading banks, funds and traders who provide the bulk of the liquidity for the FX markets, shutting up shop for the festive period. However, like the snowman and the boy, whether the pound will fly high in 2023 is yet to be seen. The currency has witnessed its third straight weekly drop against the Euro and the US Dollar, having had a strong run against the US currency over October and November.

There remains much for the pound to navigate in 2023, and like Will Ferrell's role as Buddy in the Elf Movie, the pound will have to do much navigating to find itself. With uncertainty around interest rate projections from the Bank of England, the path of inflation, the war in Ukraine and its impact on the cost of living crisis in the UK, and the impending impact on the UK housing market and economy, there is much yet to be answered, and in a very Scrooge-like fashion, there are many factors that could spoil the party.


Key Movers

The Euro and US Dollar ends the year on interesting ground. The US Dollar remains a crowd favourite, much like the Miracle on 34th Street, and during times of global risk aversion, continues to outperform. This trend could continue in 2023, as the market navigates what may be a difficult year. US recessionary fears could ironically help to bolster the US currency, known for its properties as the global reserve currency. All that's left to say is hope everyone has a lovely festive period and a happy new year, and we look forward to a bright 2023.

Expected Ranges

  • GBP/USD: 1.1980 - 0.2085 ▼
  • GBP/EUR: 1.1320 - 1.1435 ▲
  • GBP/AUD: 1.7935 - 1.8165 ▼
  • EUR/USD: 1.0545 - 1.0715 ▲