Weekly Market Report
The Dollar remains supported overall but momentum has slowed compared to earlier in the month. Markets appear to be reassessing how much of the recent safe-haven demand is already priced in, particularly since there has been no further escalations in between US and Iran.
For Sterling, there has been modest stabilisation following recent weakness, and it has held steady against both the Euro and Dollar. A lack of major UK economic data has meant the Pound has been more influenced by external factors.
The Euro has also traded in a relatively tight range, with no strong catalyst pushing it in either direction. However, underlying pressure remains due to the ongoing impact of higher energy costs on the Eurozone outlook, which continues to limit any upside.
Markets are entering a period where upcoming data releases and central bank communications are likely to play a bigger role again, after several weeks dominated by geopolitical headlines.
What this may mean for businesses
Exchange rates are currently trading in tighter ranges, which can create a false sense of stability despite underlying risks still being present.
With markets shifting back towards data and policy expectations, upcoming releases could trigger sharper movements after a quieter period.
In this type of environment, having a structured approach to timing and using tools such as forward contracts can help reduce uncertainty around future costs.
Stop Loss orders could also be looked at to help protect against sudden downside movements.