The pound saw some dramatic swings last week, with Sterling initially striking new multi-month lows following a pre-budget speech from Chancellor Rachel Reeves, before GBP exchange rates rebounded in the wake of the Bank of England’s latest interest rate decision.
Last week’s key rate movements
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GBP/EUR – Unchanged on the week
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GBP/USD – Unchanged on the week
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EUR/USD – Up 0.2% on the week
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AUD/USD – Down 0.8% on the week
Pound (GBP)
The UK’s latest GDP figures will be the primary focus for GBP investors this week. Economists forecast growth will have slowed to 0.2% in the third quarter, potentially leading the GDP figures to weigh on the pound (GBP) on Thursday.
Euro (EUR)
Germany’s latest ZEW economic sentiment index will act as a key catalyst of movement for the euro (EUR) this week. A strengthening of morale could lift the single currency through the first half of the week.
US dollar (USD)
A potential end to the longest US government shutdown on record could infuse significant volatility in the US dollar (USD) this week. While USD investors will welcome the breakthrough, it could also unleash a backlog of data for markets to sift through.
Australian dollar (AUD)
Australia will publish its latest jobs report later this week. If employment growth remained anaemic in October, it may revive Reserve Bank of Australia (RBA) interest rate cut bets and trigger some weakness in the Australian dollar (AUD).
South African rand (ZAR)
In addition to the latest domestic unemployment report, the South African rand (ZAR) will also be influenced by Finance Minister Enoch Godongwana's mid-year budget review, with ZAR investors particularly focused on whether he has anything to say about the country’s inflation target.
Canadian dollar (CAD)
In the absence of any domestic data of note, movement in the Canadian dollar (CAD) is likely to be linked to oil price movements this week. If prices rise on the prospect of the US government shutdown coming to an end, it’s likely to boost the ‘loonie’.
New Zealand dollar (NZD)
Movement in the New Zealand dollar (NZD) is likely to be tied to market risk dynamics this week, with the ‘kiwi’ poised to strengthen if the positive sentiment present on Monday persists through the session.
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