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Sterling was put through the ringer in an eventful week last time out.
Sterling’s recovery against the euro and the US dollar in the back end of last week came after several days of intense pressure. Having struggled to contain the impact of lower than expected inflation data, the pound grasped onto the European Central Bank’s (ECB) latest rate cut and impressive retail figures to mount a charge.
GBP/EUR even found time to briefly climb near its highest since April 2022, although that would prove short lived. This week’s economic schedule is relatively light but after last week’s drama, few will be expecting an uneventful time of it.
On Friday, the US revealed that the number of new building starts had fallen slightly in September. While the 2.9% drop was below expectations, it was not sufficient to resurrect the collective sense of fear we saw last month, when whispers of a recession quickly snowballed into a slightly hysterical chorus.
Having been the focus of some unwanted attention recently, China’s Q3 GDP figures provided a welcome boost. Asia’s largest economy grew at 4.6% year-on-year in the third quarter, slightly above the forecast of 4.5%.
The Chinese yuan renminbi continues to see volatility as markets digest what they regard to be underwhelming government stimulus measures. The Chinese yuan has fallen by around 2% against the US dollar in the space of a few short weeks.
Here’s what to look out for this week…
The early portion of the week sees several central bankers give public remarks. Tuesday provides an opportunity to examine the UK’s public borrowing numbers.
Things will be far quieter on the data front, partly because the IMF and World Bank are holding their annual meetings throughout proceedings.
Germany steps up for two big moments to end the week with both the HCOB flash manufacturing PMI for September and the Ifo business climate survey. The US will also chime in with durable goods orders on Friday.
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GBP: The U shape
The pound went down a path against its rivals that resembled a giant U last week, falling first before staging a stirring comeback. Less volatility would be good this week but currency markets are not exactly renowned for their stability.
GBP/USD: the past year
EUR: Where next?
The euro fought back after the inevitable weakness that accompanied another ECB rate cut. However, its outlook is far from clear, particularly with risks mounting and the ECB thought to be pivoting to a more aggressive policy.
GBP/EUR: the past year
USD: Two weeks to go
It’s remarkable to think that the US presidential election is just two weeks away. It’s getting very real now for the US dollar, with markets spending a large portion of last week evaluating the impact of a victory for Trump or Harris.
EUR/USD: the past year
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