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Weekly FX Outlook September 14th



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GB Pound

Sterling was weak last week.

Movements

GBPUSD depreciated for a second week, having opened at 1.3227 it moved down to 1.2780 on Thursday before finding some respite around the 1.28 area to close at 1.2858, with a heavy weekly fall of 2.79%.

GBPEUR performed badly last week, starting at 1.1166 and racking up four straight losses to reach 1.0785 (lowest level since March), to close at 1.0840, for a weekly loss of -2.92%.

Movement rationale

Sterling fell sharply last week, recording its worse week in six months. Investors are becoming more pessimistic about the chances of a Brexit deal being reached after the UK Government sought to rewrite part of EU withdrawal agreement that regulates trade between GB and Northern Ireland, prompting a EU threat of a trade war and legal action.

On the economic front, GDP rose 6.6% in July, in-line with the market consensus. All sectors registered robust growth, led by the construction sector. However, UK output is still 11.7% lower than it was in February.

Week ahead

GBP is expected to have a volatile week ahead, with Brexit developmentsremaining the driving factor of the currency, and several important economic data being released.

Calendar

Monday | UK Parliamentary Vote on Brexit

Tuesday 7am | Unemployment Rate (Jul)

Wednesday 7am | Consumer Price Index (Aug)

Thursday 12pm | BoE Interest Rate Decision

Friday 7am | Retail Sales (Aug)

US Dollar

The US Dollar had a relatively volatile week.

Movements

EURUSD had a relatively volatile and choppy week, opening at 1.1845 and initially trading lower (1.1760), before reversing the movement and erasing early losses to close little changed at 1.1861, (0.14%). 

GBPUSD depreciated for a second week, having opened at 1.3227 it moved down to 1.2780 on Thursday before finding some respite around the 1.28 area to close at 1.2858, with a heavy weekly fall of 2.79%.

GBPUSD had a volatile week, opening at 1.3404 and moving up to 1.3480 (new high) before sharply reversing the uptrend and depreciating to close at 1.3227, for a weekly fall of 1.31%.

Movement rationale

USD began last week strongly amid renewed Sino-US tensions, spurring demands for safe-haven assets. A sell-off in US technology stocks also helped to support the Dollar during the first half of the week, before risk sentiment turned more positive, softening the US currency during the second part of the week.

Week ahead

USD is expected to have a relatively volatile week ahead, with the following main events having the potential to influence the markets:

Calendar

Tuesday 2:15pm | Industrial Production (Aug)

Wednesday 1:30pm | Retail Sales (Aug), 7pm | Fed Interest Rate Decision

Thursday 1:30pm | Initial Jobless Claims (Sep 11)

Friday 3pm | Michigan Consumer Sentiment Index (Sep)


Euro

The Euro had a relatively volatile week. 

Movements

EURUSD had a relatively volatile and choppy week, opening at 1.1845 and initially trading lower (1.1760), before reversing the movement and erasing early losses to close little changed at 1.1861, (0.14%). 

GBPEUR performed badly last week, starting at 1.1166 and racking up four straight losses to reach 1.0785 (lowest level since March), to close at 1.0840, for a weekly loss of -2.92%.

Movement rationale

Euro was relatively subdued during the first part of the week, with all eyes focused on last Thursday’s ECB policy meeting. The single currency reacted positively to ECB comments, which largely dismissed concerns that the EUR exchange rate has recently strengthened too sharply. Investors also cheered ECB revised growth forecast for 2020.

Week ahead

The European economic calendar includes the following:

Calendar

Monday 10am | Industrial Production (Jul)

Tuesday 10am | ZEW Survey – Economic Sentiment (Sep)

Thursday 10am | Consumer Price Index (Aug)


Call +44 (0) 203 884 992 to discuss further with an advisor.

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