GBP
Sterling slipped to fresh 37-year lows against the greenback last week, as the UK economic outlook continues to sour, growth momentum wanes further, and the market looks unfavourably on the Government’s proposed unfunded tax cuts.
Technically, now cable has broken below the 1.14 figure, there is very little in the way of technical support until the 1980 lows just under 1.05, leaving the bears firmly in control of proceedings.
This week, Thursday’s Bank of England decision highlights the calendar, with policymakers likely to announce a second straight 50bps increase, dovishly disappointing compared to market expectations, thus piling further pressure on the pound.
EUR
The euro declined for the fourth week in five last week, as the dollar continued its relentless advance, though continues to trade around parity, with the bears unable to force price considerably lower.
Nevertheless, with this winter’s recession likely to be deep, and the ECB beginning to mull over the prospects of balance sheet reduction increasing fragmentation risks, the common currency’s near-term outlook remains dismal.
Looking ahead, this week’s economic docket is rather quiet, besides the latest ‘flash’ PMI reports.
USD
The dollar continued its relentless advance last week, remaining close to 2-decade highs against a basket of peers, with a hawkish Fed, and slowing global growth continuing to provide solid support.
A relatively shaky risk environment, with equities continuing to sell-off steeply, is also providing significant support to the greenback, and should continue to do so over the short-term.
Looking ahead, Wednesday’s FOMC decision is this week’s highlight, with a 3rd straight 75bps hike expected, as the battle against inflation continues.
World News
Germany’s government have set aside billions of Euros for natural gas purchases in an attempt to reduce the impact of the energy crisis since Russia cut its supplies. The government have up to €19 billion in reserves as the German economy has been particularly hit hard by the economic standoff with Russia due to its reliance on imported Russian gas and oil.
Despite her predecessor championing a US trade deal, Prime Minister Liz Truss admitted that a UK-US trade deal could be years away. As the Prime Minister landed in the US to attend the United Nations General Assembly, she told reported that negotiations between the UK and US are not taking place and has no expectation when it will start.
Data Releases
| Date | Region | Release | Previous | Consensus |
| Wednesday 21st September | US | Federal Funds Rate | 2.50% | 3.25% |
| Thursday 22nd September | UK | Official Bank Rate | 1.75% | 2.25% |
| Friday 23rd September | EU | Flash Manufacturing and Services PMIs | ||
| Friday 23rd September | UK | Flash Manufacturing and Services PMIs | ||
| Friday 23rd September | US | Flash Manufacturing and Services PMIs | ||
Indices
| Share Index | Prev. Close | Open |
| FTSE100 | 7236.68 | 7236.68 |
| DAX | 12803.24 | 12849.78 |
| CAC40 | 6061.59 | 6084.41 |