Currency Note

Pound maintains strength after choppy week

By Roseanne Bradley July 3rd, 2023

GBP/EUR is up 1% on the week

After fluctuating quite a bit last week against the euro, the pound heads into July in a similar place to this time last Monday and 0.34% up on the month. Against the US dollar, the pound’s performance has been quite steady and it is currently trading close to 1.80% higher than this time last month.

After hitting the $3 trillion mark in January 2023, Apple shares have continued to rally. Last week the multinational tech giant reported shares have gained around 48% so far this year.

US personal income expenditure index rose by 0.3% in May, matching market expectations and easing from the 0.4% increase the previous month.

US stocks ended the final day of Quarter 2 on a high. The Dow Jones rose around 200 points, while the S&P and the Nasdaq gained 0.8% and 1% respectively.

On Friday, gold fell in value, nearing in on the three-month low of €1,907 touched on June 28th.

The Canadian economy expanded in May by 0.4%. This was primarily driven by success in the manufacturing and wholesale sectors.

This week’s focus across the pond will be on the ISM manufacturing and services PMI on Monday, which will be shortly followed by the FOMC minutes on Wednesday, and various payrolls and employment data on Friday.

Economists await additional global manufacturing PMI for Spain, Italy and Brazil, while the spotlight for investors includes the Australian interest rate decision on Tuesday and Canadian employment data on Friday.

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GBP: Manufacturing PMI revised down

It has been a distinctly choppy period for the pound, with sharp rises and falls. However, GBP/EUR remains close to the 10-month high it reached in June and GBP/USD to the 15-month high.

Manufacturing PMI has just been revised downwards to 46.5 and will be followed by services and composite on Wednesday along with new car sales which are expected to have risen by around 13.5%.

On Friday it will be the Halifax House Price Index.

GBP/USD past year

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EUR: Manufacturing gloom weakens euro

The single currency has taken a bit of a dive this morning, weakening by up to 0.5% against most major rivals.

We’ve seen fairly disappointing manufacturing PMI data this morning, especially in Germany where a reading of 40.6 is the lowest reading since Covid-19 hit.

There is plenty of industrial data coming out this week, and it will be interesting to see the effects of the ECB’s largely successful measures to curb inflation on the rest of the economy.

USD: US waits for jobs data post 4th July break

It’s been a mixed period for the US dollar, as the markets weigh up whether the Fed’s pausing of interest rate increases last month was temporary or an end.

The markets will be quiet today and tomorrow, but there is plenty of data flying around this week, including manufacturing PMI, on jobs, and with the FOMC minutes being released on Wednesday.

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