All roads lead to Washington this week ahead of the Federal Reserve’s next interest rate decision. With markets overwhelmingly forecasting a quarter-point cut and the labour market showing signs of stress, the decision (and the commentary that accompanies it) will be a highly significant moment.
The US dollar’s challenging run has allowed the pound to recover some territory. Sterling begins Monday near its best level against both the euro and the US dollar since the end of October, although it too has a potentially dovish interest rate decision to deal with before markets wrap up for Christmas.
Elsewhere, Friday brings UK economic growth data for the UK. GDP is expected to have flatlined in October amid intense uncertainty and weak hiring intentions. An underwhelming result could add fuel to the rate cut fire and lead to weakness for the pound.
Tomorrow’s US JOLTs jobs report for October will be closely watched for any sign of stress. It’s been a strange period for observers of the American economy. Several delayed data points have meant the dollar has been flying blind and despite the consensus forecast of a rate cut, policymakers remain strongly divided in their opinions about monetary policy.
It was welcome back to the US core PCE price index on Friday after a break caused by the recent government shutdown. The Federal Reserve’s preferred measure of inflation held steady at 0.2% in September, in line with market expectations.
And there was big news in Tinseltown to end last week. Streaming giant Netflix announced a whopping $83 billion takeover of Warner Bros Discovery, one of the heavy hitters in the world of cinema and television. Fans of Harry Potter, HBO programming and other crown jewels of the entertainment world may soon find their favourite content available on other platforms after a deal that sent shockwaves through the industry.
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