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Sterling hit a two-month low before rallying to end last week.
The pound tumbled by two cents against the US dollar last week, hitting its lowest ebb since early August on Friday. Sterling had been enjoying a positive week against the euro but saw earlier gains knocked back.
Friday was a day of mixed sentiment across financial markets. On the one hand, news that the first stage of the ceasefire agreement between Israel and Hamas was smoothly implemented represented a welcome release of pressure. On the other hand, US President Donald Trump threatened a “massive increase” in trade tariffs on China, an announcement that sent the US dollar down sharply.
As if it wasn’t enough dealing with Trump, Sir Keir Starmer and his team may soon have to deal with steel tariffs imposed by the European Union. The European Commission last week suggested slashing the amount of steel it imports tariff-free in order to counter the effect on the trade war.
After what feels like a prolonged stretch of quiet, things ramp up for sterling with the UK reporting GDP and unemployment figures. A whopping 13 speaking engagements for the Bank of England means there’ll be plenty of chatter about monetary policy, too.
The Federal Reserve’s Jerome Powell will make a major speech on Tuesday evening but things are still eerily quiet across the Atlantic. It remains unclear when the government shutdown will end in Washington, or indeed how close both sides are to reaching an understanding.
The German ZEW economic sentiment survey will be closely watched this week. Today, the eurozone’s attentions will be largely focused on France, where wrangling over the budget is entering a new phase. More analysis on that below.
Lastly, thank you to everyone who download our October-December Quarterly Forecast. Don’t forget that there’s still time to get your copy, and with the autumn budget looming large, it really never has been more important to stay in the know. You can download the report here.
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your account manager on 020 3918 7255 to get started.
GBP: Packed schedule
New data from the jobs market and the economy at large fill up a packed schedule for the pound this week. That gives the pound more chance of generating some upside momentum this time out, but as usual, it also means things could quickly go pear shaped should the numbers disappoint.
GBP/USD: the past year
EUR: Deadline day
Today is the last day that a new budget can be submitted to the French parliament. Given it has (either directly or indirectly) led to the defenestration of the last two prime ministers, we can expect the euro’s relative value to be a little bouncy today. President Macron reappointed Sebastian Lecornu prime minster on Friday, but it remains to be seen if he will be more successful second time around.
GBP/EUR: the past year
USD: Sentiment stalemate
American consumers aren’t budging much in terms of the economic outlook. The University of Michigan’s consumer sentiment index ticked down one-tenth of a point to 55 in October. With little changing on the economic front, the US dollar is being heavily influenced by geopolitics and external events.
EUR/USD: the past year
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