Around 2:10 p.m., the euro lost 0.67% to 0.9750 dollars. The pound yielded 0.82% to 1.1026 dollars. The two currencies had started the session up sharply before falling back.
The dollar rose on Friday against the euro and the pound in a very volatile foreign exchange market, while inflation reached 10% in the euro zone, a record and across the Channel, the government seems unresolved in a pinch budgetary.
Around 12:10 p.m. GMT (2:10 p.m. in Paris), the euro lost 0.67% to 0.9750 dollars. The pound yielded 0.82% to 1.1026 dollars. The two currencies had started the session up sharply before falling back.
Inflation in the euro zone jumped again in September to reach 10% over one year, a new record fueled by soaring energy and food prices.
“This poses a real danger to growth,” said Sam Miley of Cebr, who believes that rising prices will plunge the euro zone into recession.
The gloomy prospects for European growth, while tension is mounting between Brussels and Moscow, are pushing traders to favor the dollar, galvanized by its status as a safe haven and the resistance of the American economy to the shocks of recent months.
Across the Channel, the pound sterling, which had fallen to a historic low against the dollar on Monday before rising over the course of its week, was also falling again.
“Uncertainty reigns. For investors, the pound is in a confusing zone,” summarizes Fawad Razaqzada, analyst at City Index.
“The volatility on the pound as on the euro is at peaks. Volatility on the pound has peaked since the end of the financial crisis in 2009, while on the euro, it has been at levels more seen since the debt crisis in 2012”, warns Matthew Ryan, analyst at Ebury.
Earlier in the session, the pound had returned to its level of seven days earlier, before budget announcements whose unquantified cost had frightened the markets.
The shock on the bond market notably forced the Bank of England (BoE) to act.
The British public budget forecasting body OBR announced on Friday that a “first version” of its budget forecasts taking into account the government’s costly economic plan will be presented to the executive next Friday.
But the government merely indicated that these forecasts would be published on November 23.
“The pound will remain under pressure in the coming weeks while waiting for these forecasts, especially if ever there are worrying leaks” on these forecasts, warns Craig Erlam, analyst at Oanda.
It remains to be seen whether the two European currencies will end the week on this decline or will rise again.