The Pound made unexpectedly huge gains versus the majors in Q3..
| GBP
| Usually, Q3 is a tough period for the Pound. More often than not, August sees GBP devalue (mainly due to the lack of market liquidity during the 'holiday' month and so the safe havens gain) and September is a 50-50 hit with positions/profit being closely monitored going into the business end of the year.
This time things were A LOT different..
GBP v EUR achieved its best Q3 performance in 10-years.
GBP v USD recorded its best Q3 performance since 2013 and its fifth best on record.
So for those of you who had hedged, secured Forward Contracts or just exchanged at SPOT when selling Sterling during Q3, it was overall an unexpected high wave that you rode.
A glimpse into Q4 now then and things may yet continue for the Pound. The main reason for this is that the ECB are firmly expected to continue cutting its interest rate each month, which in-turn devalues the EUR. Plus, as it stands, the UK economy looks much healthier than the Euro-Zones, giving GBP an additional edge.
Across the pond, it is expected the Fed will cut its interest rate by at least 50bp by year-end. With the BoE, it is still very much uncertain what will happen by year-end and this too gives the Pound an edge versus the USD.
EUR The Euro gained a mammoth 5% versus the USD in Q3. In fact, right now it's the second best time since April 2022 to be buying $ with €. Overall though, the Euro & Euro-Zone are not doing particularly well at the moment.
Yes inflation is under control, but interest rates will continue to fall (which weakens the EUR) and stagflation becomes an issue if the economy isn't kick-started quickly. Germany is really struggling and is weighing on the bloc and politically the area looks to be unstable.
USD The US and USD had a very tough Q3. The Dollar has been punished by pretty much all currencies and for a variety of reasons too. The US economy is slowing, jobs are soft, inflation is still not fully under control and interest rates are starting to come down after 2-years.
But things can quickly change on this market and so we remain cautious over the near-term future of the currency, especially with the US election next month. Stocks and global risk play a huge part in the valuation of the Dollar and we appear to be approaching overbought territory, so there may not be much more upside available from current levels.
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Expected mid-market ranges for October 1st 2024 | | |
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Upcoming Data | Monday 30th September 2024 | N/A
| Tuesday 1st October 2024 | 14:45 US - Manufacturing PMI 15:00 UK - BoE member Pill speech |
Wednesday 2nd October 2024 | 08:00 EU - Spanish unemployment change 08:30 EU - ECB's De Guindos speech 10:00 EU - Euro-Zone unemployment rate 12:00 US - Mortgage applications 13:15 US - Non-Farm employment change |
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| Thursday 3rd October 2024 | 08:15 EU - Spanish PMI 08:45 EU - Italian PMI 08:50 EU - French PMI 08:55 EU - German PMI 09:00 EU - Euro-Zone PMI 09:30 UK - PMI 12:30 EU - ECB publishes monetary policy meeting 13:30 US - Initial/continuing jobless claims 14:45 US - PMI 21:30 US - Fed balance sheet |
| Friday 4th October 2024 | 11:00 EU - Italian retail sales 13:30 US - Average earnings, non-farm payrolls & unemployment rate
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