Market Update 27th June – 1st July

Where you will be able to keep up to date with all the latest changes in the currency market

GBP

The GBP/EUR exchange rate remained mostly unchanged this week whereas we have seen a lot of volatility with the GBP/USD rate over the last week. We are still seeing some sterling weakness due to the ongoing situation within the UK government. As there is continuing uncertainty surrounding Boris Johnson leadership we have seen some Sterling weakness as when there is any uncertainty within the government it will tend to weaken the currency. We have a speech coming out from BoE’s Governor Bailey coming out this Wednesday where it is expected he will be talking about the ongoing cost of living crisis as well as rising inflation rates. The Bank also said that UK inflation will rise to 11% in the autumn. We the inflation figures come out people will be less likely to spend and then more likely to save which could potentially see some Sterling strength.

EUR

Over the last couple of week we have seen the GBP/EUR rate drop to lows we haven’t seen since the back end of 2021. We have seen a lot of volatility with the EUR due to interest rate hikes from the ECB and BoE. We have a speech from president Lagarde this evening where it could be expected she may mention rising inflation within Europe. If there are further mentions of interest rates being hiked we could expect to see some EUR strength as people will be encouraged to save instead of borrowing off the bank. Yet if the comments come out and the rates are not being hiked as much as expected then we could see some EUR weakness.

USD

We have seen a little bit of USD recovery over the last couple of weeks. In the middle of this month, we saw the dollar from to pre-pandemic levels this could be due to the ongoing war within Ukraine. Whenever there is any uncertainty within global markets people will invest in the dollar as it is seen as a safe haven currency. If the conflict continues, as expected, then we could expect to see a lot more Dollar strength yet if there is an unlikely end to the conflict then we could see some possible USD weakness as people will look to invest into other currencies. We have GDP figures out in the US which will show the rise or fall with inflation. If figures come out higher than expected then we could expect to see some more dollar strength as people will be encouraged to save instead of borrowing off the banks however if we see the figures come out lower than expected we could see some USD weakness.