The pound continued to struggle against the euro last week, weakening by almost a cent to finish Friday at its lowest level since the start of October.
For once though, nobody could blame it on the UK economy failing to pull its weight. Quite the opposite, in fact, with inflation coming in below expectations and strong performances from the manufacturing and retail sectors. Chancellor Rachel Reeves finally had some good news ahead of the autumn Budget (26 November), but she still has a mountain to climb when it comes to making the numbers add up.
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If the Labour party was tempted to feel the clouds had lifted, the outcome of the Caerphilly by-election was a reminder of the amount of progress still needed. Plaid Cymru outduelled Reform to take the Labour heartland seat for the first time in its history, a vote that could signal a seismic political realignment.
The UK steps out of the spotlight this week as a busy period for the eurozone takes over. The bloc reports preliminary economic growth for the third quarter on Thursday. A few hours later, the European Central Bank will announce its latest interest rate decision. Currency markets are anticipating a third consecutive hold.
In the United States, the Federal Reserve is expected to announce its second quarter-point interest rate cut of the year on Wednesday evening.
There are also some trade negotiations to keep an eye on this week. First, EU officials will meet their Chinese counterparts in an attempt to insulate the bloc from President Trump’s tariff regime.
Across the Atlantic, its been something of a mixed bag for the White House. After angrily scrapping negotiations with northern neighbour Canada, Trump is expected to announce the framework of a deal with China when he meets Xi Jinping this week.
