Quiet week ahead means the market is vulnerable to big news stories

The euro saw growth on Monday, climbing nearly 0.5% over the dollar and 0.16% on the pound. The pound saw a less significant – but still punchy – 0.3% rise on the dollar. In terms of the economic calendar, there is little on the books this week, but that can leave currencies at their most vulnerable.

Today saw the news that the UK government borrowing costs were once again higher than predicted. That rise was driven, in part, by Prime Minister Keir Starmer’s failure to immediately back Chancellor Rachel Reeves following the welfare U-turn.

With only the publication of new manufacturing and retail sales data on Thursday and Friday to look forward to, the pound will largely be at the whim of other stories. The news that UK borrowing increased by more than £6bn over last year and £3bn more than expected, could become a big pain for the government.

Similarly, there are no major data releases planned in the US that could impact the markets. However, later today Federal Reserve Chair Jerome Powell is giving a speech which may give some indication of when the US may be able to expect an interest rate cut.

While under huge pressure from the President to make a cut, the continuing impact of Donald Trump’s trade tariffs is creating too much uncertainty. Today’s speech will be an opportunity for the President to challenge Powell.

European Central Bank President Christine Lagarde is also speaking today, though, with EU inflation down to its 2% target, there is less pressure on what she has to say. The ECB is due to make an interest rate decisions announcement on Thursday; however, it is widely predicted to remain at its current 2.15% level.

However, as with any quiet week, it means the market is particularly vulnerable to big news stories that dominate the agenda and worry traders.

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GBP: UK government borrowing leaps

The pound was ahead of the dollar on Monday but lagged behind the euro, continuing its second-place run of 2025. This morning’s news that UK government debt costs coming in £3bn higher than predicted could have a big impact on the pound today.

GBP/USD past year

EUR: Steady climb ahead of interest rate decision

The euro climbed nearly 0.5% on the dollar and 0.15% on the pound on Monday, starting another strong week for the EU currency. With an interest rate decision on Thursday that is largely expected to be a hold at 2.15%, it could be a steady week for the euro.

EUR/USD past year

USD: Fed Chair under mounting pressure

The dollar started the week sluggishly, trailing the euro by 0.5% on Monday. With Fed Chair Jerome Powell giving a speech this afternoon and US President Donald Trump looking for any chance to criticise the head of his central bank, there is a chance of another damaging public bust up.

USD/GBP past year

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