Last week was one of the most volatile we have seen so far this year, driven largely by sharp and widespread US Dollar weakness. GBP/USD surged from 1.34 to 1.38 in a matter of days before settling back near 1.36 by Friday evening. The pullback came after two late-week developments: confirmation that the US government is heading into a shutdown, and President Trump naming Kevin Warsh as his preferred next Fed Chair. Warsh is widely regarded as a hawk, which has added confusion given Trump’s repeated calls for lower interest rates. In the short term, this may mark a pause in the Dollar sell-off, but early price action this week will be key in determining whether sentiment has genuinely shifted.
The first full week of the month is typically heavy on economic data, and this week is no exception. Volatility looks set to continue, particularly with labour market data and central bank decisions ahead.
We start on Monday with manufacturing PMI data from the Eurozone, the UK and the US. European and UK readings are expected to remain unchanged, while the US figure is forecast to improve to 48.5. While still below the expansionary 50 level, a stronger US PMI could offer some short-term support to the Dollar.
Tuesday brings the Reserve Bank of Australia interest rate decision, where markets are pricing in a 25 basis point hike to 3.85%. Any deviation from expectations would likely drive sharp moves in AUD pairs. Later in the day, US JOLTS job openings data is released, with forecasts pointing to a higher number of vacancies. Given the Fed’s increasing focus on labour market conditions, this will be closely watched and could influence Dollar sentiment.
On Wednesday, services PMI data is released across Europe, the UK and the US, alongside Eurozone flash inflation. European inflation is expected to fall to 1.7%, reinforcing expectations that the ECB has room to cut rates later in the year. In the US, ADP employment is forecast at +45k, a modest but positive reading ahead of Friday’s main jobs report.
Thursday sees Eurozone retail sales, expected to decline by 0.2%, followed by interest rate decisions from both the Bank of England and the European Central Bank. No changes are expected from either, though the BoE is widely anticipated to cut rates at its next meeting, which may cap Sterling strength.
Friday rounds out the week with US non-farm payrolls, expected to show around 70,000 jobs added. Given the Fed’s growing sensitivity to employment data, a weak number could reignite Dollar selling, while any upside surprise may stabilise the currency into the weekend.
Overall, this remains a headline-driven and data-sensitive market. With volatility elevated and key levels being tested, timing and strategy will be crucial over the coming days.
GBP/EUR 1.1540 GBP/USD 1.3689 GBP/AED 5.0304
GBP/AUD 1.9699 GBP/CHF 1.0603 GBP/CAD 1.8686
GBP/NZD 2.2767 EUR/USD 1.1844 GBP/ZAR 22.0638