Sterling Struggles, Euro Awaits CPI, Dollar Eyes Jobs Data
Interest Rate / Inflation
| Zone | Interest Rate | Inflation |
|---|---|---|
| UK | 4% | 3.8% |
| EU | 2.15% | 2% |
| US | 4.25% | 2.9% |
Key Market Updates
- Rachel Reeves could raise 21 billion with 8 Tax reforms.
- UK bonds are sliding, lagging behind their European and US peers.
- Portugal plans to raise taxes on house purchases by foreign buyers in a bid to increase the supply of affordable homes.
- US will impose a 100% tariff on branded or patented pharmaceuticals starting October 1st.
- Starmer is set to announce that all adults in the UK will be required to own a new form of government issued digital ID.
- GBP dropped below 1.34 last week reaching lowest levels since Sept 3rd.
- Trump calls Russia a ‘paper tiger’ and says Ukraine with the EU’s help can regain all of its territory.
- Talks of a Digital Euro could become a reality by 2029, ECB governor Cipollone pushing to get the project moving.
- Stocks fell last week as FED Chair Powell gives no hint of more rate cuts.
- Putin’s secret plan to hack Moldova’s crucial election is revealed in documents seen by Bloomberg.
GBP
Sterling remains under pressure, with markets watching the Labour Party conference for any signs of unfunded spending. Such signals could weigh on gilts and GBP. Focus will then turn to Bank of England speakers, where a firmer tone may offer support. GBP/USD is holding near 1.3400, with US data likely to dictate whether it moves higher.
| Day | Data Print | What is it? | Prev + Consensus | Market Impact |
|---|---|---|---|---|
| Tuesday 30th | Gross Domestic Product (yoy) | Measure of the total value of goods and services produced in the UK on a monthly and quarterly basis. Main measure of the UK’s economic activity. | Prev 1.2% Consensus 1.2% | A low reading will cause GBP weakness because a weaker economy decreases foreign investment and the opposite if GBP strengthens. |
EU
The Euro is supported by Spain’s recent credit upgrade and steady bond sentiment. Attention now shifts to inflation releases across the bloc, with Eurozone CPI expected around 2.2%–2.3%. Stronger prints could limit ECB easing expectations and give EUR a lift.
| Day | Data Print | What is it? | Prev + Consensus | Market Impact |
|---|---|---|---|---|
| Wednesday 1st | Core Harmonized index of Consumer Prices | This measures changes in the prices of a representative basket of goods and services in the European Monetary Union. This excludes components such as food, energy, alcohol and tobacco. Another key indicator to measure inflation. | Prev 2.3% Consensus 2.3% | If it comes in increased as expected it will strengthen the EUR as it puts pressure on the ECB to make a decision on what will happen on the next IR meeting. |
| Friday 3rd | Producer Price Index (yoy) | This is an index that measures the change in prices received by domestic producers of commodities in all stages of processing. | Previous 0.2% Consensus – N/A MoM expected: 0.4% → 0% | A high reading will cause EUR strength and a decreased reading will cause EUR weakness. |
USD
The Dollar gained ground last week on stronger GDP and labour data. This week’s focus is on JOLTS, jobless claims, and Friday’s payrolls, all key for Fed outlook. A strong labour print would support further USD strength.
| Day | Data Print | What is it? | Prev + Consensus | Market Impact |
|---|---|---|---|---|
| Wednesday 1st | ISM Manufacturing PMI | This is a leading indicator gauging business activity in the US manufacturing sector. | Previous 48.7 Consensus 49.2% | This will cause marginal USD strength as they are getting closer to the target of 50 because it means that the manufacturing economy is expanding. If it does drop even more it will cause USD weakness. |
| Friday 3rd | Non-farm payrolls | This is the number of new jobs created in the US during the previous month in all non-agricultural businesses. | Previous 22k Consensus 39k | If it does rise as expected it will cause USD strength as there are more jobs being created in the US which means it will boost consumer spending. |
Why this matters
This week’s data releases could spark sharp moves in currency markets. For businesses and individuals with upcoming FX needs, even small shifts can have a meaningful impact on costs and margins. Our team can help you manage the risks and position yourself to benefit from opportunities.
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