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FX markets enter the week of 26th October braced for an unusually dense run of event risk, with three major set-pieces - the UK Autumn Budget, a Federal Reserve decision and a European Central Bank meeting - all landing within 48 hours of each other. The backdrop is one of diverging fortunes across the majors: Sterling sits near multi-month highs, having been lifted by firmer domestic data, while the Euro is mired in a deepening fiscal crisis in France. GBPUSD is trading around 1.3375 and GBPEUR near 1.1939, a fresh 17-month high, with the Pound firm on both crosses. EURUSD, meanwhile, languishes near 1.1200 as French debt fears and softer German data keep the single currency on the defensive.
The policy picture remains as divergent as it has been in years. The Bank of England looks increasingly likely to raise rates in November after headline inflation accelerated to 3.5%, its highest since October 2025, and unemployment unexpectedly fell. The Federal Reserve, by contrast, is expected to sit tight this week, with markets pricing only a slim chance of a move, though a December hike remains firmly in view amid a robust economy and elevated inflation. The ECB is also anticipated to hold, having paused after September's increase, with policymakers pointing to December as the more natural moment to reassess. For FX markets, this split leaves every incoming data release capable of shifting the relative rate calculus between pairs.
Against this, the week is dominated by its central-bank and fiscal set-pieces. Wednesday brings both Chancellor Healey's first Autumn Budget - where thin fiscal headroom and a nervy gilt market make the Pound's reaction binary - and the Fed decision, where any hawkish steer on December could revive the Dollar. Thursday's ECB meeting, US Q3 GDP and PCE inflation, and Friday's eurozone GDP and inflation prints round out the calendar. France's bond crisis and the approaching US midterms add further scope for volatility across all three blocs.
GBP/USD Range last week: 1.3299 – 1.3419
The Pound climbed to a one-month high against the Dollar last week, buoyed by a run of upbeat UK data that firmed up Bank of England rate-hike bets. Early support came from an encouraging jobs report, which showed the unemployment rate dipping unexpectedly over the three months to August. Sterling drew a further lift from September’s inflation figures, with headline CPI quickening from 3.1% to 3.5% - its highest since October 2025. Together, the releases cemented expectations of a November hike and encouraged investors to price in further tightening beyond it. The Pound struggled to hold those gains late in the week, however, as a sharp contraction in September retail sales soured the mood and overshadowed an unexpectedly strong services PMI.
Wednesday’s Autumn Budget is the week’s defining event and the chief risk for Sterling. In his first fiscal statement, Chancellor Healey will need to convince investors that his plans can support growth without unsettling the public finances. With borrowing having overshot forecasts and fiscal headroom under pressure, any sign of excessive issuance or inflationary measures could rattle the gilt market and drag the Pound lower, though the market is currently well disposed towards the UK and a relatively uneventful Budget is widely expected.
Beyond the Budget, the domestic calendar is light, with September mortgage approvals and consumer lending due Thursday. That leaves Sterling largely at the mercy of broader risk sentiment and the fallout from the Fed’s decision on Wednesday.
GBPEUR Range last week: 1.1862 – 1.1959
The Euro spent last week on the back foot, dogged throughout by the deepening fiscal crisis in France. The single currency was knocked early by a weekend of civil unrest and a renewed selloff in French government bonds, and the pressure only built as the week wore on. The French 10-year yield pushed above 5% to its highest since 2002, stoking fears of a full-blown fiscal crisis in the bloc’s second-largest economy, while continued protests in France, Italy and elsewhere added to the gloom. Downbeat German figures compounded the weakness, with October’s ZEW economic sentiment index deteriorating by more than forecast.
Thursday’s European Central Bank decision is the first major hurdle. Rates are widely expected to be left unchanged after September’s hike, so the focus falls squarely on the accompanying guidance. With no clear evidence yet of energy costs feeding through to inflation and higher yields already tightening conditions, policymakers look in little rush to move again, pointing to December as the more natural moment to reassess. Any expression of concern over the French debt situation could weigh further on the Euro.
The single currency could face renewed pressure on Friday, when preliminary third-quarter GDP figures are released alongside flash October inflation prints from France and Germany. Growth is expected to have slowed sharply over the quarter. The German Ifo survey on Monday and consumer confidence readings midweek round out a busy calendar.
EURUSD | Range last week: 1.1183 - 1.1260
The Dollar had an uneven week, slipping early before recovering some ground later on. It came under pressure at the outset as improving risk appetite drained safe-haven demand, with political uncertainty adding to the subdued mood - investors increasingly weighing the prospect of the Democrats retaking Congress and what that might mean for President Trump’s economic agenda. The Greenback clawed back part of those losses in the second half of the week, however, as a jump in oil prices rattled markets and revived safe-haven flows. Treasury yields have since eased towards one-month lows, leaving the bond market firmly in the driving seat for broader Dollar direction.
Wednesday’s Fed decision is the week’s focal point. No change is expected this month, with heavyweight officials signalling little urgency to move again just yet, and markets pricing only around a 10% chance of a hike. With the economy growing strongly and inflation elevated, a December rise remains likely, so investors will parse the statement for any hawkish hints on timing - a firmer tone could help revive Dollar demand.
The data slate is also busy. Advance Q3 GDP and September PCE inflation, the Fed’s preferred gauge, both land on Thursday and could prove pivotal for the rate outlook. Durable goods, consumer confidence and new home sales are due Tuesday, with jobless claims on Thursday. The approaching midterm elections add a further layer of risk.
Important Data Releases
Tuesday: US Durable Goods Orders (12:30pm), US Consumer Confidence (2pm), EU ECB President Lagarde speech (5pm)
Wednesday: AUD CPI (12:30am), NZD RBNZ Interest Rate Decision (1am), UK Autumn Forecast Statement (10am), CAD BoC Interest Rate Decision (1:45pm), US Fed Interest Rate Decision (6pm), US FOMC Press Conference (6:30pm)
Thursday: EU Economic Sentiment (10am), US Core PCE Price Index (12:30pm), US GDP Q3 Advance (12:30pm), US Initial Jobless Claims (12:30pm), EU ECB Interest Rate Decision (1:15pm), JPY Tokyo CPI (11:30pm)
Friday: JPY BoJ Interest Rate Decision (time TBC), French GDP Q3 (5:30am), French CPI Flash (7:45am), German Unemployment (8:55am), German GDP Q3 (9am), Italian GDP Q3 (9am), EU GDP Q3 (10am), US Employment Cost Index (12:30pm), German CPI Flash (1pm), US Chicago PMI (1:45pm)
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