The Weekly Market Update
News & Insights
w/c 3rd November: Decisive data
GBP
fell against major currencies last week due to the concerns surrounding falling UK productivity and its corresponding impact on the November budget. This concern has been created by the OBR claiming there may be an additional £20 billion deficit Reeves will need to fill. There is also scope for further movement this week with many in the market awaiting the Bank of England interest rate decision which will determine further pound direction. Overall, Sterling continues to be dominated by the worries surrounding the budget however there may be potential for further movement depending on the Bank of England interest rate decision.
EUR
held steady this week through better-than-expected data and confirmation from the ECB that interest rates will be steady. Although there is potential for Euro movement this week being determined by the data releases on Wednesday and Thursday which may, if negative, see some Euro weakness. Overall, the Euro remains stable supported by positive data and clarity from the ECB however data releases this week may change this.
USD
The U.S. Dollar strengthened last week because of the Fed interest rate decision. There was much market anticipation surrounding the decision however Jerome Powell cut the rate by 25bps as expected and he signalled that any further easing is “far from” happening. Due to the government shutdown, there is reduced amount of data available which means that many in the market will be evaluating the mid-tier labour data releases this week to determine whether dollar strength will continue. Overall, the US dollars recent strength has been determined by the tone set by Jerome Powell however there is scope for some weakening determined by the data releases this week.
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