Through the American trading session on Friday, the EUR/USD currency pair sat around the 1.1500 level. It found it difficult to maintain this standard as the US Dollar continued to grow in strength. Worsening consumer sentiment Consumer sentiment has sunk to historic lows, and ongoing tensions in the Middle East are adding to this tempest. Consequently, investors are fleeing to safety in safe-haven assets.
Recent missile exchanges between Tehran and Tel Aviv have escalated concerns in the region. In response, investors are looking for safer places to invest their money. As a result, the USD found its footing, adding further downward pressure to the EUR/USD exchange rate. Consequently, the currency pair is struggling to find support near the important 1.1500 level.
Britain’s stuttering currency pair, the GBP/USD currency pair, took a massive dive. It passed under the 1.3500 mark following the release of weak UK Retail Sales figures. That’s the first time this pair turned red today. Yet as the weekly trading comes to an end, it’s knocking on the door of that 1.3450 region. Slow growth, high inflation, and rising interest rates have all played a role in this downward trend. Simultaneously, a renewed risk aversion has injected a strong demand for the US Dollar.
UK Retail Sales figures have been in steep decline over the past several months, putting many on edge about the state of the British economy. Yet, analysts are quick to just that this slump hung directly over a broader marketplace mood of unpredictability. A new wave of risk aversion is sweeping over global investors. Focus is back on favouring the safe-haven assets as fear grips in and these have weighed over the GBP/USD downward.
Consequently, gold prices broke above $3,360 due to these macroeconomic factors. They’re presently trading around $3,370 as we head into the weekly close. Gold prices are rising. This increase is indicative of a demand for safety—in this case, from investors—stemming from growing geopolitical conflict. The one-two punch of pandemic panic and money moving to safety is giving gold a turbo charged shot of short-term momentum right now.
As the week comes to a close, the resonance of war in the Middle East is rattling market nerves. At the same time, UK economic indicators have been an equally impactful driver. The US Dollar’s strength continues to make this the most important driver for EUR/USD and GBP/USD as investors tread water in turbulent seas.