The pound tumbled by two cents against the US dollar last week, hitting its lowest ebb since early August on Friday. Sterling had been enjoying a positive week against the euro but saw earlier gains knocked back.
Friday was a day of mixed sentiment across financial markets. On the one hand, news that the first stage of the ceasefire agreement between Israel and Hamas was smoothly implemented represented a welcome release of pressure. On the other hand, US President Donald Trump threatened a “massive increase” in trade tariffs on China, an announcement that sent the US dollar down sharply.
As if it wasn’t enough dealing with Trump, Sir Keir Starmer and his team may soon have to deal with steel tariffs imposed by the European Union. The European Commission last week suggested slashing the amount of steel it imports tariff-free in order to counter the effect on the trade war.
After what feels like a prolonged stretch of quiet, things ramp up for sterling with the UK reporting GDP and unemployment figures. A whopping 13 speaking engagements for the Bank of England means there’ll be plenty of chatter about monetary policy, too.
The Federal Reserve’s Jerome Powell will make a major speech on Tuesday evening but things are still eerily quiet across the Atlantic. It remains unclear when the government shutdown will end in Washington, or indeed how close both sides are to reaching an understanding.
The German ZEW economic sentiment survey will be closely watched this week. Today, the eurozone’s attentions will be largely focused on France, where wrangling over the budget is entering a new phase. More analysis on that below.
Lastly, thank you to everyone who download our October-December Quarterly Forecast. Don’t forget that there’s still time to get your copy, and with the autumn budget looming large, it really never has been more important to stay in the know. You can download the report here.
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