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The government shutdown continues to affect the US dollar.
The US government shutdown rolls on into a fresh calendar week following Donald Trump’s threat of permanent layoffs and severe spending cuts for “Democrat” agencies.
Sterling was able to regain half a cent against the US dollar to end last week, while trading mostly sideways against the euro. Alongside the political manoeuvring, news that the American services sector stalled in September gave the pound and the euro time to strengthen before the close of Friday.
The unfolding drama in Washington DC will most likely be centre of attention for currency markets this time out. Judging by all the grandstanding, it’s unlikely we’ll get a quick resolution to the shutdown. Clearly, both sides believe the political brownie points will be worth it, despite predictions that the economy will lose out on billions of dollars for every week some departments remain closed.
This week’s data calendar looks lighter with the absence of labour figures from the US. Halifax will provide their latest update on British house prices tomorrow, following a surprise upgrade in a rival survey. And we’ll see just how long the latest plan for peace in Gaza lasts when representatives from Israel and Hamas meet in Cairo.
Wednesday evening brings the latest minutes from the Federal Reserve’s monetary committee – an event likely to be highly scrutinised given it announced the first cut to interest rates in nine months at September’s meeting.
Germany’s latest balance of trade figures are released on Thursday. The University of Michigan’s consumer sentiment report follows on Friday, in what should be an interesting release given the present uncertainty.
Keep an eye out this week for our latest Quarterly Forecast, which will be hitting your inbox on Thursday. Please feel free to peruse our previous reports before then, should you wish to get the juices flowing.
And in case you missed it, our sister company Your Overseas Home held its bi-annual virtual event on Saturday. This is a tremendous resource for anyone interested in relocating abroad, so if you’re in the fortunate position of considering a move, you can sign up for the next event or catch up with on-demand sessions by clicking 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: Services downgrade
Friday brought more bad news for the pound and the UK economy. S&P’s initial estimate of services output in September was revised down from 51.9 to 51, which probably prevented the pound from making more significant progress.
GBP/USD: the past year
EUR: Another strong week
Suddenly, the euro’s trajectory seems notably more stable than that of its rivals. Another solid week brought a half-cent strengthening against the US dollar, and while the euro was little moved against the pound, it is still around two cents stronger compared to the start of summer.
GBP/EUR: the past year
USD: No data comeback
The lack of data means the US dollar is more susceptible than ever to the rumours and whispers of investors. Those will grow following the release of FOMC minutes with little in the way of evidence to serve as a riposte should the dollar fall.
EUR/USD: the past year
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