Sterling looks to end summer on a high

The pound has battled through a challenging summer that has featured a new prime minister, speculation around interest rates and lingering concerns that the war in the Middle East would spill over into a prolonged period of high inflation. In the main, it has emerged with credit, ending August almost a cent and a half stronger against the euro and the US dollar compared to the start of June.

We’ve now reached the time of year when many market participants return from their sun loungers and the action kicks into a higher gear. There are still many unanswered questions, making trying to second guess what might happen this autumn a very risky business.

Thursday was a relatively quiet day in currency markets. Most of the movements came in other parts of the financial landscape, with the high price of oil and gas again putting pressure on government borrowing costs, as well as pretty much any publicly listed company that isn’t linked to AI.

Before the week is out, focus is trained on the picturesque Wyoming mountains, where Kevin Warsh will make his first speech at the annual Jackson Hole symposium as Federal Reserve chair. US inflation remains stubbornly high and investors have been fretting about whether Warsh believes interest rates may need to rise again, as well as how he plans to manage the Treasury’s controversial intervention in the bond market.

We were expecting to get the latest update from Nationwide on house prices this morning, but it looks as though that report has been pushed to the other side of the long weekend. And while the UK enjoys a late-summer break, plenty of markets across the world will be very much open, including Germany, which reports its latest inflation data on Monday.