Overnight the pound made a run above 1.18 against the euro, making that the high for the year. Looking back to the beginning of April, the exchange rate also peaked over 1.18 before being sharply sold off by nearly 3% over the following two weeks. Touching 3 pips higher this time around before falling back below the marker, highlights the healthy run of the pound as of late. Recent lows at the tail end of July saw the exchange at 1.1535, a rise of 2.4% in just under 3 weeks. Before April, you would have to look back to February 2020 to see the rates around the same level. However, this was as the rate was plummeting as the Covid pandemic started to reach European shores.
At present the market prefers both the pound and the dollar over the single currency on the continent. More so, the market has an appetite for dollars because of the strong growth numbers in the labour market. Friday saw the release of the US Non-Farm Payroll number, coming in well above expectations which saw the economy add over 900,000 jobs throughout July. Analysts are touting this as a key indicator the Fed could raise rates sooner than the initial marker of 2023.
Because of the strong job numbers and growing anticipation of the rate hike sooner than expected, EURUSD has also seen a sell off. Currently holding ground around the 1.1755 level, the euro will need a shift in sentiment to reverse its current path.
Have a great day.
Jack Nicholls, Relationship Manager.
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