The pound and euro ended the week at levels not seen in decades against the dollar on Friday, European currencies suffered from recession fears while the greenback benefited from geopolitical concerns fueled by Moscow.
Around 8:50 GMT (10:50 Paris), the pound fell 0.89% to $1.1161 after falling to $1.1151, a level not seen since 1985, during the The euro fell 0.79% to $0.9758 after falling to $0.9751. a threshold not reached since 2002.
Year-to-date the euro is down 14% against the steamroller dollar and the pound is down 17%.
European economies, directly affected by the rise in gas prices since the start of the war in Ukraine, are mounting signs of weakness.
In the euro zone, the slowdown in private sector economic activity accelerated in September, according to the PMI index. Across the Channel, the Bank of England estimates that the UK entered a recession as early as the third quarter.
A bleak picture that is distracting investors from the euro and the pound despite significant interest rate hikes by the central banks in September.
Conversely, “The United States is in a unique position of high inflation and sustained growth better than elsewhere, which means the Federal Reserve (Fed) has both reasons and means to raise rates faster and further than its peers.” , explains Mark Haefele, analyst at UBS.
“The trend of the euro-dollar pair will not change as long as the market’s risk appetite is absent due to worries about the Ukraine-Russia conflict,” which will benefit the greenback, a safe haven, flooded Francesco Pesole , analyst at ING.
In regions of Ukraine controlled in whole or in part by Moscow, referendums on Russia’s annexation have begun, polls dubbed “simulacra” by Kyiv and the West and indicating an escalation of the conflict.
For its part, the yen fell 0.23% to 142.72 yen, holding up slightly better than the European currencies.
On Thursday, the Bank of Japan maintained ultra-loose monetary policy, but the Treasury said it had intervened in the foreign exchange market to support the yen.
“The move worked, but the question is for how long,” warns Ricardo Evangelista, analyst at ActivTrades.
“Continued support for the yen will require continued intervention over an extended period of time and will be a test of the Japanese authorities’ resolve and capacity,” he said.