GBPEUR feel dramatically yesterday, giving up the gains the pair made on Monday. Comments from the Bank of England regarding interest rates, and results of the German federal election had previously enabled Sterling to spike against the Euro. The reason for this move to the downside is almost solely related to petrol. Analysts believe the shortage of petrol is “fuelling concerns of economic disruption”, while rising petrol prices, which are at an 8-year high, are “adding to UK inflationary price pressure worries”. It has been reported that Boris Johnson has put the Army on standby to help with any delivery issues and has increased the number of short-term visas for overseas workers to tackle the HGV driver shortage. Thankfully for Sterling, Euro gains are capped as a result of “the inconclusive German election result and natural gas shortages in mainland Europe”.
GBPEUR started the session at 1.1724 and fell by over 1% as it dropped to its lowest point since January. The pair closed Tuesday at a miserable 1.1587.
Despite dropping from the 1.37 range earlier in the week, Cable showed a fair amount of resilience to open Tuesday less than 10 pips from that mark at 1.3691. However, with market sentiment souring the Dollar was able to rise. GBPUSD finally closed the session at a disappointing 1.3535.
The US Dollar Index (DXY) retreated slighted below 93.70 yesterday as the US Dollar “zoomed to its highest in more than 10-months, tracing the rise in US Treasury bond yields”. The US 10-year Treasury yields spiked to 1.54% and “continued to feed on the US Federal Reserve hawkish stance”. The increasingly hostile market conditions will likely stimulate further Dollar gains due to the Greenback safe-haven nature.
Given the volatility in yesterday’s session, EURUSD had a rather quiet day. The pair opened Tuesday at 1.1677 and closed just above that mark at 1.1681.