Approaching the end of October, now with a German managing the England football team, the FX market has been experiencing notable shifts across key currencies. We can safely say the FA's decision isn't what has impacted GBP or EUR rates. From the ECB’s policy outlook to concerns about the US retail sector, economic developments are creating a dynamic FX environment. With Tesla and Space X advancing the forefront of technology respectively too, we continue to do the same (in our own way) with your weekly market update!  Here's what the last week means for your international transfers and conversions.

Key Updates:

• EUR hits multi-week lows: The Euro dropped ahead of today's ECB interest rate decision, as expectations build for potential rate cuts.
• USD remains firm: The US Dollar strengthened with growing anticipation for robust retail sales data, adding pressure on EUR and GBP.
• GBP slips vs USD: GBP/USD hit its lowest since August, driven by economic concerns and political uncertainty.
• Inflation watch: Major central banks continue to focus on inflation, with critical data releases shaping monetary policy direction in the US and Europe.

GBP

The Pound has been under pressure recently, dipping below the 1.30 mark against the US Dollar for the first time since August 20th. This decline can be attributed to a combination of sharp lowering UK inflation, ongoing economic concerns within the UK, and a strengthening of the US dollar. The Pound faced an intense sell-off as the UK Office for National Statistics published a soft Consumer Price Index (CPI) report for September. The CPI report showed that the annual headline inflation softened to 1.7%. Price pressures were expected to decelerate but at a slower pace to 1.9% from 2.2% in August.

Looking ahead, tomorrows UK retail sales data will be a key date to watch, as weak consumer spending could signal deeper economic woes.

💡BLK.FX Perspective

Usually, inflation tends to devalue a currency as it can be equated with a decrease in a currency/economy's buying power. However, the sharp inflation deceleration we saw this week (which should in theory benefit the Pound) forced the market to raise bets supporting interest rate cuts in each of the two policy meetings remaining this year. This is the reason Sterling fell.

USD

The US Dollar continued its recent strength, benefiting from a solid run of economic data. Retail sales for September, due today, are anticipated to be robust, which could further cement the USD's dominant position.

Political factors, including the US trade situation and upcoming election-related uncertainties, may create some turbulence, but for now, the greenback seems well-supported. The Fed’s stance on interest rates also plays a role—should inflation remain high, further tightening could push the USD even higher.

EUR

The Euro has dropped to multi-week lows, with traders bracing for an important ECB meeting today. The European Central Bank is widely expected to announce its third interest rate cut of the year, after policymakers flagged reduced inflation risks and a weakening growth outlook.

The European economy continues to struggle with slowing growth, and any rate cut from the ECB could drive the EUR/USD lower, particularly if the US dollar continues its strong run. Keep an eye on inflation data and further comments from ECB policymakers as we move towards year-end.

Final Thoughts:

As we move deeper into Q4, we continue to monitor the significant geopolitical and economic events driving currency movements. The euro's vulnerability, the pound’s struggles, and the US dollar’s strength present both opportunities and challenges for businesses with international exposure. Be sure to stay updated, especially around critical dates and the UK’s upcoming retail data release

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A note to please continue to use support@blkfx.co.uk in your emails as well as your account manager to make sure someone in the team can pick up your query as soon as possible.

If you need any advice or have questions about how these trends might affect your specific situation, don’t hesitate to reach out!

You can always reach us via email at info@blkfx.co.uk, on WhatsApp: +44 7939 432196 or via phone: 020 8064 0617 or any of the team via their direct emails