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Sterling continued to shed value against its rivals to begin the week.
Sterling continued a wretched streak of performances to start the week, falling again against the US dollar and the euro. Currency markets remain locked in a risk management exercise, with conflict in the Middle East and the possibility of Bank of England rate cuts dominating discussion.
The pound fell by half a cent against the euro and three quarters of a cent against the US dollar on Monday. EUR/USD had a more stable day, although any euro fightback was batted away amid a broad risk off tone.
UK house prices rose at their fastest pace since November 2022 in September according to new data from Halifax. Prices rose by an annualised 4.7% in September, pushing the average house price to just shy of the record set in June 2022.
Retail sales in the eurozone increased by 0.2% in August. That was driven largely by an increase in auto fuel spending, as well as bigger sales in non-food products and food, drink and tobacco.
One piece of good news was tempered by more bad news from Germany, where factories orders fell by 5.8% from July in August. That was the sharpest drop since January and came in well shy of market forecasts, which had expected factory orders to fall by a less alarming 2%.
A report by the non-partisan Committee for a Responsible Federal Budget predicted that Donald Trump’s economic commitments would increase US federal debt by twice as much as those proposed by Kamala Harris. Trump has pledged sweeping tax cuts on the campaign trail, the fiscal impact of which would dwarf the narrower band of tax credits and social services touted by his opponent.
You can find plenty more analysis on the strangest US presidential campaign in our latest Quarterly Forecast, scheduled to arrive in your inbox this Thursday (10 October). Find out where leading banks predict the pound will move against its main rivals, plus analysis of the boom in French property.
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: A tough pill to swallow
Bank of England chief economist Huw Pill’s efforts to balance Andrew Bailey’s comments last week went largely unheard by markets. Sterling began the week by ceding more ground to the euro and the US dollar as some are now predicting the Bank could announce rate cuts at every meeting from now until September.
GBP/USD: the past year
EUR: Euro rallies against pound
The euro has finally started to push back against the pound after dipping to its lowest in several years recently. That has more to do with the Bank of England than economic data from the eurozone, mind you.
GBP/EUR: the past year
USD: No landing now possible
It’s a testament to how quickly market sentiment shifts that the US is now debating if the outlook has altered from a soft landing to no landing at all. This scenario would see the economy maintain growth while propelling another bout of inflation. The mere mention of such a situation supported the US dollar on Monday.
EUR/USD: the past year
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