The pound faced notable pressure last week as a surprisingly soft UK inflation print prompted some investors to price in a December interest rate cut from the Bank of England (BoE).
Last week's key rate movements
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GBP/EUR – Down 0.6% on the week
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GBP/USD – Down 0.8% on the week
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EUR/USD – Down 0.3% on the week
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AUD/USD – Up 0.2% on the week
Pound (GBP)
UK economic releases are in short supply this week, which may turn the focus back to Chancellor Rachel Reeves’s upcoming autumn budget, concerns over which may expose the pound (GBP) to additional pressure.
Euro (EUR)
With no policy changes expected from the European Central Bank (ECB) this week, the spotlight for EUR investors will be on the Eurozone’s latest GDP reading. If growth remained weak in the third quarter, the euro (EUR) is likely to fall.
US dollar (USD)
The Federal Reserve’s latest interest rate decision will be centre stage this week. Another 25bps rate cut from the US central bank is largely priced in, leaving any subsequent movement in the US dollar (USD) to be linked to the Fed’s policy outlook. A dovish tilt to its guidance could place notable selling pressure on USD.
Australian dollar (AUD)
Australia’s latest consumer price index will act as the primary catalyst for the Australian dollar (AUD) this week. If the CPI figures report inflation ticked up in the third quarter, it may temper Reserve Bank of Australia (RBA) rate cut bets and lift the 'Aussie’.
South African rand (ZAR)
Movement in the South African rand (ZAR) is likely to be linked to broader risk sentiment this week amid a lull in ZAR economic releases.
Canadian dollar (CAD)
The Canadian dollar (CAD) is likely to face headwinds this week, as the Bank of Canada (BoC) is expected to cut interest rates again when it concludes its latest policy meeting on Wednesday.
New Zealand dollar (NZD)
In the absence of any notable domestic data, the New Zealand dollar (NZD) is likely to be driven primarily by market risk sentiment, with the ‘kiwi’ poised to rise if US-China trade tensions continue to ease.
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