The pound is rapidly losing value. Overview for 28.09.2023

The British pound sterling, paired with the US dollar, continues to decline. The current GBPUSD exchange rate stands at 1.2140.

Today's pound levels represent new six-month lows.

Investors believe that the Bank of England has concluded its aggressive cycle of monetary policy and is not expected to raise interest rates in the near future. This is due to worsening economic conditions and reduced inflationary pressures.

Over the course of September, the pound has depreciated by 4%, representing its poorest performance since August of the previous year.

Last week, the BoE maintained the interest rate unchanged at 5.25% per annum. This was a departure from the monetary tightening measures initiated in December 2021.

Furthermore, the strength of the US dollar is significantly weighing down on the GBP.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

The Japanese yen is on a downward trend. Overview for 02.10.2023

The Japanese yen, paired with the US dollar, continues its decline. The current USDJPY exchange rate is 149.79.

The primary reason for the weakening of the JPY exchange rate is the global difference in interest rates between the US Federal Reserve and the Bank of Japan.

At the same time, the Japanese economy appears to be in good shape, or at least this is what the Tankan data reveals. According to the figures released today, the non-manufacturing sector is displaying its strongest activity performance in 32 years. The service sector is benefitting from the full restoration of economic activities following the pandemic.

Confidence among major manufacturers has surpassed expectations, and business sentiment in the service sector has reached a multi-year high. The Large Business Sentiment Index increased by 9 points in September, up from the previous 5 points. Automakers and food and beverage industries are among those feeling more optimistic than others.

The service sector sentiment index rose to 27 points, the highest since 1991.

The weakening of the yen is amplifying these effects. Prices for tourists visiting the country appear to be lower, stimulating activity in the non-manufacturing sector. The weakened yen is also discouraging overseas travel among residents, redirecting all recreational interests within the country. Thus, the devaluation of the JPY has become another supporting factor for the economy.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

The British pound hits a new low. Overview for 04.10.2023

The British pound sterling against the US dollar continues to follow a downward trend. The current GBPUSD exchange rate stands at 1.2080.

The rapid rise in US treasury bond yields is bolstering the USD, affecting riskier assets and strengthening the USD against major currencies.

According to FedWatch, investors are expecting a Fed interest rate hike in November with a 35% likelihood and in December with a 55% probability. The potential increase in the interest rate spread between the Federal Reserve and the Bank of England is exerting pressure on the GBP.

Particular attention is now paid to the upcoming release of the Non-Farm Payroll (NFP) report for September, scheduled for Friday. If the statistics surpass expectations, the likelihood of an interest rate hike in November will increase. This, in turn, would support the dollar and put pressure on the pound.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

Euro/dollar awaits economic data. Overview for 06.10.2023

The primary currency pair is maintaining its stability on Friday. The current EURUSD exchange rate stands at 1.0543.

The market is holding its strength as it prepares for the release of substantial economic data from the US. The unemployment rate is expected to drop to 3.7% in September from the previous 3.8%, and non-farm payrolls to increase by 171,000 following a gain of 187,000 in August. Average hourly earnings may have risen by 0.3% m/m after a 0.2% increase in August.

The impact of this statistical data will either bolster the dollar’s rally if it aligns with expectations or lead to a decline if the data proves strong.

US ten-year government bond yields have now stabilised.

The rapidly increasing US national debt has receded into the background as it has become clear that this growth rate is unsustainable.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

Euro/dollar has reached a neutral point. Overview for 10.10.2023

The major currency pair appears neutral on Tuesday. The current EURUSD exchange rate stands at 1.0565.

US treasury bond yields experienced a slight decline yesterday, coinciding with a drop in the value of the US dollar. In the absence of news and stock market information, investors were engaged with their preferred activity, namely looking for shifts in the rhetoric and tone of statements made by the Fed’s monetary policymakers.

Two representatives of the Federal Reserve expressed their opinion on the interest rate issue, and the market noted a shift in the comments sentiment.

Lorie Logan, the president of the Federal Reserve Bank of Dallas, said that there would be less need for hikes if long-term interest rates remain high for an extended period. She has previously adopted a more aggressive attitude.

Philip Jefferson, the Fed’s vice chair, stated that the central bank would have to proceed cautiously, considering the recent increase in bond yields.

The US resumes the release of statistics today. It is worth paying attention to September's producer price index data.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

JPY retreats once again. Overview for 12.10.2023

The Japanese yen is once again depreciating against the US dollar. The current USDJPY exchange rate stands at 149.14.

The market has not received any confirmation of interventions by the Bank of Japan. USDJPY quotes are gradually returning to the levels before the emotional turmoil.

Meanwhile, the international backdrop is becoming more stable. The yield on US government bonds has declined, providing some support to the yen. However, despite this decline, the difference between ten-year interest rates in Japan and the US is at a minimum of 390 points.

Naturally, the market attempts to fixate on this spread. Statistics from the Ministry of Finance show that residents have purchased foreign bonds for a substantial amount of approximately 3.34 trillion yen. The majority of these funds are invested in US Treasury bonds.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

EURUSD is ready to make moves. Overview for 17.10.2023

The main currency pair is in a consolidation phase on Tuesday. The current EURUSD exchange rate stands at 1.0550.

The beginning of the week was quiet, bringing neither news nor statistics. Nevertheless, the US dollar has retreated while the capital markets have shown interest in risk.

Today could bring considerable changes. The macroeconomic calendar will present a substantial volume of significant statistics, providing ample material for the market to react to.

During the day, the eurozone will release the ZEW economic sentiment index for October. It is expected that the index has improved to -8.0 points from the previous -8.9 points. This would offer a clear answer to the question of how the economy is responding to the European Central

Bank's readiness to pause in monetary tightening.

The US is preparing for two significant releases. The first is the retail sales data for September. The forecast suggests a 0.2% m/m growth, compared to the 0.6% increase in August. A more moderate report would send a positive signal, indicating that consumers are taking high prices into account and reducing their spending.

The second is the industrial production data for last month, which may have increased by only 0.1% m/m in September after expanding by 0.4% m/m in August. These are weak numbers and could be a reason to worsen sentiment unless there is something interesting in the components of the report.

Overall, the US dollar's position appears quite strong.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

GBP faces the risk of a substantial decline. Overview for 19.10.2023

The British pound sterling paired with the US dollar has returned to a downward trend. The GBPUSD current exchange rate is 1.2130.

Global risk aversion is weighing against the British currency.

In the past few days, the UK has released a significant amount of economic data, with a focus on price-related parameters. The growth in average monthly wages, excluding bonuses, dropped to 8.1% in August, falling short of the expected 8.3% and the previous month's figure of 8.5%.

The UK is once more encountering challenges related to prices. In September, inflation remained at 6.7% y/y, despite expectations of a decline to 6.6%. On a monthly basis, the consumer price index increased by 0.5%, as expected. In August, monthly inflation had risen by 0.3%.

Core prices have declined but not as markedly as forecasts suggested. In September, the figure was 6.1% y/y, against expectations of 6.0% and the previous reading of 6.2%. On a month-on-month basis, core prices rose by 0.5%, as expected, after expanding 0.1% m/m in August.

Interestingly, the producer purchase price index declined to -2.6% y/y in September, while the selling price index recovered to -0.1% y/y.

The price situation appears notably unstable and could either improve or deteriorate significantly. This uncertainty presents a risk factor for GBP.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

AUD climbed to its weekly peak. Overview for 24.10.2023

The Australian dollar is rising against the US dollar on Tuesday. The current AUDUSD exchange rate stands at 0.6354.

Aussie rose to its weekly high because the US government bond yield started declining, and geopolitical risks shrank.

Lots of market attention is focused on the comments and actions of the Reserve Bank of Australia. After recent aggressive movements of the RBA towards reaching its fiscal goals, traders hoped that the regulator would somehow soften its rhetoric.

This week, Australia will be active on the macroeconomic calendar. It has already issued PMI reports today. The PMI in production in October dropped to 48.0 points from 48.7 points previously. The PMI in services slid down to 47.6 points from 51.8 points earlier. The decline below 50 means that business activity has also dropped.

Inflation statistics should never be skipped. For Wednesday, a consumer inflation Q3 release is due. The CPI is expected to drop to 5.2% y/y from 6.0%. Calculated quarter by quarter, inflation could have risen to 1.1% from 0.8% previously. Strong inflation data may support Aussie.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

GBP lacks support from market conditions

The British pound sterling appears weak against the US dollar. The current GBPUSD exchange rate stands at 1.2080.

The US dollar has considerably strengthened its position over the last two days, which had a negative impact on other currencies, including the GBP.

The market is gearing up for the release of a large amount of significant statistics in the US, with the Q3 GDP parameters to be published today and the core PCE to be announced tomorrow. In this context, demand for a safe-haven asset is growing, pushing up the US dollar.

The statistics released recently in the UK came out mixed. The CBI industrial trends orders declined to -26 points in October from -18 points earlier. The preliminary manufacturing PMI increased to 45.2 points in October from the previous 44.3 points while the services PMI dropped to 49.2 points from 49.3 points previously.

It is worth noting that even with high UK inflation and rather tight parameters of consumer demand, businesses maintain their activity at a fairly high level. This is a positive signal.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

JPY has strengthened. Overview for 30.10.2023

The Japanese yen paired with the US dollar has stabilised its position. The current USDJPY exchange rate stands at 149.56.

Today marks the beginning of a two-day meeting of the Bank of Japan, scheduled to conclude on Tuesday with a decision on the interest rate. There is a high likelihood that the rate will remain at -0.10% per annum. It is essential to pay attention to the structure of the Central Bank's statement, as it is expected to focus extensively on further devaluation of the yen and its impact on the economy and finances.

The BoJ may attribute its inaction to the insufficient growth in wages in Japan. However, the central bank may simultaneously raise its core inflation forecasts for FY 2023 and FY 2024, while the outlook for 2025 is expected to remain unchanged, below 2%.

The yen is significantly influenced by the fact that the Bank of Japan is still not ready to change the structure of its monetary policy. The difference in interest rates between BoJ and the US Federal Reserve is causing the JPY to retreat.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

GBP faces the risk of encountering selling pressure. Overview for 01.11.2023

The British pound, paired with the US dollar, is trending lower. The current GBPUSD exchange rate stands at 1.2136.

A British retail trade consortium reported yesterday that inflation in UK stores is on a declining trend. In September, the inflation rate reached 5.2%, marking the fifth consecutive month of decline. The last time such a low level was recorded was in August 2022.

The report highlights that one of the pivotal factors contributing to the price decline is the reduction in mark-ups on domestically grown food products.

A year ago, the overall inflation in the UK stood at 11%, marking a 41-year high. Since then, prices have been on a decline and have reached 6.7%.

The reduction in inflationary pressure at the consumer level is a positive signal for the pound. However, in the near future, investors may not give it much attention as the focus shifts to the Federal Reserve's meeting and the release of the NFP employment report in the US for October on Friday.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.