Sterling Stays Strong

GBP

Sterling remains this week’s success story alongside the Swedish Krona which hit a 2 year high against the euro on inflation figures way above the Riksbank’s 2% mandate. Sterling’s bull run is mainly due to political stability with PM Boris Johnson extending his lead in the polls and the market’s expectation that the Bank of England will hike interest rates sooner rather than later.

Talks about ending the dispute over the Northern Ireland Protocol began yesterday with British officials commentating that the “EU had gone further than the UK had expected”. The Government also approved 800 temporary butcher visas in order to save a significant amount of pigs from being culled.

EUR

We saw the euro being sold off as risk appetite returned and beta currencies continued to strengthen. EU leaders are now drafting emergency plans to assist their citizens from the impact of the energy crisis. This would involve income support and tax breaks, meaning more euros in circulation and supply was deemed to outweigh demand and the euro was sold on the back of that.

Today data is expected to show that trade surplus grew in August to 14.2 billion euros, from 13.4 billion euros in July.

USD

Wall street recorded its biggest gain since March of this year as stocks were buoyed by stronger earnings and a hearty risk appetite. The US Dollar fared worse and weakened against most G10 currencies. The FED tapering remains a hot topic alongside the debt ceiling debacle.

President Biden signed legislation temporarily raising the government’s borrowing limit to $28.9 trillion. The deadline for debt default has now been pushed back to December.