Home Daily Commentaries Pound rallies against the US Dollar and Euro

Pound rallies against the US Dollar and Euro

Daily Currency Update

GBP - British Pound

The pound tumbled to 1-week lows against the US dollar on Thursday, as risk sentiment gives a boost to the safe haven currencies. The US dollar found itself in the driving seat and left GBP/USD trading below the $1.38 handle for the first time since September 9th. With over 10 central bank meetings next week, it is likely that the majority of currencies will experience a degree of increased volatility, particularly around the time of the Fed meeting on Wednesday.
The pound managed to push back through the $1.38 handle before the European open on Friday, however this has changed when UK retail sales missed expectations and came in at -0.9%, 0.4% worse than expected.

Key Movers

The US dollar was the best performing major on Thursday as better than expected retail sales data caused the US dollar to soar. At the same time, there has been a slight drop off in global risk appetite, which also gave it a boost. Expect this volatility to continue in the run up to next Wednesday’s Federal Reserve meeting. Rates will likely remain unchanged, however it’ll be interesting for investors to assess Jerome Powell’s tone around inflation data, considering the ongoing stagflation vs transitory inflation debate.
In other news the euro continues to be knocked by the upcoming German elections. As they have had a stable government under Merkel for the past 16 years, it is likely the euro will continue to experience a dampening effect for the next week or two until the result.

Expected Ranges

  • GBP/USD: 1.3710 - 1.3865 ▼
  • GBP/EUR: 1.1655 - 1.1790 ▼
  • GBP/CAD: 1.7380 - 1.7525 ▼
  • GBP/AUD: 1.8710 - 1.8955 ▼