In a week where we've seen an Oasis reunion, the Currency market has also been rocking and rolling. There has been a real shift in the GBP/USD rate, so Stop Crying Your Heart Out if you're buying Dollars (maybe start if you're selling USD to Sterling....) So, Sally can wait, but we know you can't for our Market update!

Key Updates:

• GBP Potential: Sterling on the up, especially if the UK budget stays fiscally neutral and the Bank of England plays it safe on rate cuts.
• USD Flex: The Dollar has had a rocky week however holding its ground ahead of key U.S. inflation data today. A potential FED rate cut is in the air, but for now, the greenback’s still got momentum.
• EUR Slip: The Euro’s dipping as lower inflation boosts the odds of an ECB rate cut in September. All eyes on Friday’s Eurozone data!

GBP

Sterling has shown resilience, with potential for continued outperformance against the US Dollar. This strength hinges on the UK government delivering a fiscally neutral budget in October, as anticipated by market analysts. There’s speculation that the budget could introduce over £20 billion in tax increases, aimed at addressing cuts in public spending from previous years. If the Bank of England maintains its cautious stance on rate cuts, GBP/USD could climb further.

USD

The US Dollar has had a mixed week, falling against most G10 currencies at the start but holding its ground towards the end. The Greenback recovered some losses ahead of the crucial U.S. inflation data release today. Traders are eyeing Friday's core personal consumption expenditures (PCE) price index, the Fed’s favored inflation measure, which could provide clues on future rate decisions. Despite recent volatility, the Dollar has gained against major currencies, supported by month-end demand. However, with markets already pricing in a potential rate cut, any surprises in the PCE data could influence the Dollar's near-term trajectory

EUR

The Euro’s fallen slightly this week, dipping below $1.11 as inflation news suggests the ECB might cut rates soon. Spain’s inflation dropped to 2.4% in August, lower than expected, and similar trends in Germany hint at a broader slowdown. With the ECB meeting on September 12, the chances of a rate cut just got stronger. Keep an eye out for more inflation data from France, Italy, and the Eurozone this Friday—this could be a game-changer for the Euro.

My Final Thoughts:

As we head into the week, there are a few key things to keep on your radar. The upcoming U.S. core PCE inflation report is a big one—it’s the Fed’s favourite measure of inflation and could influence future rate decisions. The upcoming US election is also something to keep in mind over the coming weeks.... For the Euro, watch for inflation data from France, Italy, and the broader Eurozone, as these could sway the ECB’s next move. And with the UK budget on the horizon, any news on fiscal policy could impact the Pound.

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