Weekly round up & the week ahead

Weekly Currency Update

Indicative mid-market rates

The euro suffers as French debt fears bite, hitting 18-month lows against the dollar and lifting GBP/EUR towards 1.18.

A widening gap between French and German borrowing costs left the single currency with its worst week against sterling in four months. Sterling's gains are largely a by-product of euro weakness; it still remains under pressure against the dollar.

Week in review

Last week saw the continuation of euro weakness, driven again largely by political and fiscal instability in France alongside volatile conditions across bond markets. EUR/USD slid down to 1.1160, its lowest in over a year but has since steadied at 1.1206.

That weakness lifted GBP/EUR to 1.1838 (0.8447) on 7 October, its best level of 2026 and the highest in over a year. Sterling had a little support as markets expect the Bank of England to raise rates from 3.75% in November, which limited the pound's downside.

GBP/USD was largely flat, trading in a narrow band around 1.32 and ending the week at 1.3242. The dollar's strength against the euro was not matched against sterling. US data muddied the picture: September payrolls rose by just 29,000 and unemployment ticked up to 4.2%, which cut against a hawkish tone in the Federal Reserve's latest minutes.

Year to date, GBP/EUR is up 3.1%, while the euro has lost 4.5% against the dollar and sterling 1.5%.

Week ahead

No major central bank decisions are due, but there is plenty of data and commentary.

• Wednesday: US inflation (CPI). The week's key event. A hot print would support the dollar and the Fed's rate-hike path; a soft one, alongside weak payrolls, could pull EUR/USD and GBP/USD higher. The ECB President also speaks.
• Thursday: UK August GDP, industrial production and trade. A firm result would back November rate-rise expectations and could keep GBP/EUR near its highs. US retail sales and the Fed Chair's remarks follow.
• Friday: Bank of England Governor speaks. Any steer on rates, energy prices or inflation will move sterling.

Beyond this week, the diary fills quickly: the UK Budget and the Fed decision on 28 October, the ECB on 28-29 October and the Bank of England on 5 November. French fiscal headlines remain the key risk for the euro.

With so many catalysts, timing matters for anyone with currency exposure. Contact Clear Treasury for in-depth analysis and forecasts tailored to your business. Give us a call, email us, or request a call-back.