Pound up against Euro despite Johnson resignation

By Tom Arnold

Last week was a very busy one on the currency markets with significant volatility across the major currency pairings.

The big winner was the US Dollar, which gained 2 year highs against the Pound and 20 year highs against the Euro. Mainly driven by expectations of ongoing interest rate increases in the US, together with a strong move into “safe haven” investments, which our regular readers will know includes the Dollar, as a result of the ongoing situation in Ukraine, and the knock-on impacts from this into global supply chains of energy and food, which are adding increasing pressure to the worldwide cost of living crisis.

The Euro was the big loser, as the war in Ukraine seemingly has the greatest impact on its neighbouring bloc, largely due to the reliance of the EU on Russian oil and gas. Further supplies were cut off last week, and while a move away from Russian supply is inevitable, it creates a huge pressure on the EU economy having it forced on them so quickly, when there is already a cost of living crisis specifically related to the energy situation.

The Pound had a mixed week, losing out to the Dollar as already described, but winning against the Euro. Obviously, the weakened Euro was partially responsible for this, but in fairly surprising news, the other boost for the Pound came with the resignation of the under-fire Prime Minister. Normally a change of leadership at the top of a country would be expected to weaken a currency, as the currency markets hate nothing more than uncertainty, but it seems the markets would rather have uncertainty than Boris and his scandal mired antics. This means that Sterling has managed to push up by almost 2 cents against the Euro, giving an excellent buying opportunity to those looking for their very own Place in the Sun this summer.

This week’s data and announcements


Bank of England Governor Bailey speech


Bank of England Governor Bailey speech

European ZEW Economic Sentiment

EU EcoFin Meeting


New Zealand Interest Rate Decision


UK Industrial + Manufacturing Production

German CPI Inflation

US CPI Inflation

Canadian Interest Rate Decision


Australian Unemployment Rate

US Initial Jobless Claims

US Producer Price Index


US Retail Sales

US Consumer Sentiment Index