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The euro has slipped against its rivals since Wednesday.
Sterling opens Friday trading at its strongest level against the euro since March 2025. It was a similarly positive day for the pound to US dollar rate, which advanced by close to a cent to sit at its best in well over a month.
We just heard the French economy shrank by 0.1% in the third quarter of this year, kicking off what is an exceptionally busy day of economic data on the continent. With more growth figures from the eurozone and core economies like Germany and Italy on the way in the coming hours, there is a very large risk of significant exchange rate movement before the week is out.
If yesterday’s decision from the European Central Bank (ECB) was a fairly mundane hold, the news surrounding its president, Christine Lagarde, was anything but. Lagarde confirmed yesterday she would be stepping down from her post in February, several months earlier than had been expected. Insiders suspect Lagarde could take the helm at the World Economic Forum (WEF), whose annual meetings in Davos attract the great and the good of the global financial system.
While the new president of the ECB is unlikely to bring about a material change to policy, there will likely be a period of political wrangling over who gets to succeed her. That is unclear for the moment, although Pablo Hernández de Cos and Klaas Knot are generally thought to be the most naturally successors.
Thursday was a relatively smooth day for both the pound and UK government debt, two closely watched indicators of how the Budget was received. The reaction will likely continue for some time, though, with lingering arguments around welfare spending and the UK’s relationship with Europe to hash out.
The US economy surpassed expectations to grow at an annualised rate of 3.4% in the third quarter. The closely watched core PCE price index increased by 0.3% in August, while personal spending and income arrived just a touch below consensus forecasts.
Tech’s tough week looks set to continue as more disappointing earnings reports continue to worry investors. Based on this morning’s futures market, the tech-heavy Nasdaq index is set to open almost 2% lower when the bell sounds on Wall Street this afternoon.
GBP: Budget calm hands focus back to the Bank
The muted reaction to the Budget suggests investors were reassured by Healey’s commitment to the fiscal rules, even though the government now has less room to absorb another economic shock. Attention now returns to the Bank of England ahead of Thursday. Business surveys of expected selling prices will help show whether firms plan to pass higher energy costs on to customers before next week’s policy decision.GBP/USD: the past year
EUR: Data provides chance for a lift
Thursday was another tough session for the euro, with even some fairly hawkish commentary from the ECB doing little to support it. Several key economic indicators provides a chance to reverse that momentum, even if the widening gap between interest rates looks likely to limit significant upside.GBP/EUR: the past year
USD: Strong growth keeps December hike in play
The dollar remains well supported after the US economy grew faster than expected in the third quarter. Inflation also moved higher in September, strengthening the argument of policymakers who believe borrowing costs may need to rise again. The Federal Reserve’s decision was not unanimous, with two members preferring an immediate increase.USD/GBP: the past year
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