The pound collapsed on Friday as markets were rattled by the contents of UK Chancellor Kwasi Kwarteng’s mini-budget.
One factor driving fears was the latest economic data out of the bloc. Germany’s business climate indicator hit a two-year low while consumer confidence slumped to a record low. Eurozone economic sentiment dropped to its lowest level since February 2021.
Meanwhile, Russia cut gas supplies through the Nord Stream 1 pipeline to 20% capacity, fuelling fears of a potentially devastating energy crisis in Europe.
However, the euro benefitted from its negative correlation to a weakening US dollar. In addition, stronger-than-expected GDP and inflation data on Friday helped EUR claw back some losses.
This week’s trade has started on a sour note, with more troubling economic data rattling EUR investors.
The single currency may continue to struggle as the forecasts for upcoming data releases – including eurozone retail sales and the final services PMI, as well as German factory orders – are looking rather bleak.
Energy supply fears may also continue weighing on the euro.
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)