Last week was a topsy turvy one for the pound as it fought back against recent weakness in stages. Friday’s news that US PPI fell to zero in September was enough to instigate a restrained GBP/USD rally to close proceedings.
Over the course of last week, GBP/EUR recovered from several falls to finish near where it began. EUR/USD followed a similar trajectory, trading in a narrow band with a couple of small setbacks. The euro lost just under half a cent to the US dollar by Friday afternoon.
UK economic growth returned to positive territory in August, injecting a bit of momentum into sterling after several weeks of falls. That news was good for chancellor Rachel Reeves as she readies her much anticipated autumn budget, yet would it lead to success for the pound heading into 2025?
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The European Central Bank (ECB) meet again this week to decide the path of interest rate reductions. Markets are fairly split between another cut and a hold at the moment. Time will tell who is right but it will be a nervous wait for the euro.
With PPI falling, the University of Michigan consumer sentiment survey followed suit in September, falling from a five-month high set last month. High prices and personal income remained at the forefront of people’s minds, as did the increasingly prominent US election in November.
Here’s what to look out for this week…
The UK is back in the spotlight on Tuesday with unemployment data for August. Germany’s ZEW economic sentiment index then follows, along with a handful of Federal Reserve speakers after the European session close.
Wednesday’s UK inflation will be closely watched as an indicator of the Bank of England’s next move.
It’s all eyes on the ECB on Thursday, when Christine Lagarde and co announce their latest interest rate decision. That’s followed by the customary press conference, as well as retail figures from the USA.
The UK’s own retail figures and US building permits are the two key focuses on a slightly quieter Friday.
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