How did the Pound fare in Q3?

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. 



Expected mid-market ranges for October 1st 2024

gbp
GBP
usd
USD

    $1.3275 - $1.3375    


gbp
GBP
eur
EUR

    €1.1950 - €1.2025    

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


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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