| After another volatile week in the markets, we ended on a slightly calmer note – at least on the surface. President Trump brokered a temporary ceasefire in the Middle East, easing geopolitical tensions and helping risk sentiment recover. However, trade tensions between the U.S. and China remain unresolved, and the U.S. government shutdown continues into another week, casting uncertainty over both economic activity and investor confidence. The Dollar finished last week on a weaker footing, with GBP/USD recovering above 1.34 and EUR/USD climbing toward 1.17, as traders positioned cautiously ahead of key inflation data and central bank decisions later this month. For Dollar buyers, this late-week dip presented some attractive opportunities, but given how quickly sentiment can shift, staying nimble remains the name of the game. This Week’s Market Drivers It’s set to be a quieter week on the U.S. data front; the Federal Reserve is now in its blackout period ahead of next week’s interest rate decision, meaning no Fed speeches or forward guidance. Additionally, due to the ongoing government shutdown, some key economic reports have been delayed, reducing visibility on U.S. fundamentals for the time being. Monday begins with a focus on China, with a trio of releases; GDP, retail sales, and industrial production – all due during the Asian session. Markets will be watching closely for any signs that Chinese growth is slowing further amid renewed trade tensions. A weaker-than-expected print could weigh on risk assets and commodity-linked currencies like AUD and NZD. Wednesday will be the key day for Sterling watchers, with the release of UK inflation data. Headline CPI is forecast to rise to 4% (from 3.8%), while core inflation is expected to be slightly higher at 3.7%. For the Bank of England, this creates a challenge – inflation is moving higher again, yet growth remains subdued. Cutting rates too aggressively could add to inflationary pressures, while keeping them steady risks tightening financial conditions. This release could therefore bring significant volatility to GBP pairs. Also on Wednesday, Tesla and IBM report earnings after market close – both are influential for broader equity sentiment, especially given recent concerns over tech valuations and slowing corporate margins. Thursday brings U.S. jobless claims, which have been creeping higher in recent weeks – a sign that the American labour market is starting to soften. Combined with limited progress in resolving the shutdown, this could reinforce expectations that the Fed will need to adopt a more dovish tone at its next meeting. In Europe, Eurozone consumer confidence is expected to remain negative, reflecting persistent cost-of-living pressures and weak domestic demand. Friday rounds off the week with UK retail sales, expected to fall by 0.2% month-on-month. A weaker print would underscore consumer fragility in the face of high prices and tighter financial conditions, while any upside surprise could offer the Pound some short-term relief. We’ll also see flash PMI data from Europe, the UK, and the U.S., which should provide a timely read on how business activity is faring as we head into the final quarter of the year. Outlook All in all, while the ceasefire has temporarily calmed markets, the underlying risks – geopolitical tensions, the U.S. shutdown, and uneven global growth – remain firmly in place. The Dollar’s recent weakness could prove short-lived if risk sentiment deteriorates again, while the Pound will remain sensitive to this week’s inflation and retail data. GBP/EUR 1.1494 GBP/USD 1.3410 GBP/AED 4.9280 GBP/AUD 2.0641 GBP/CHF 1.0636 GBP/CAD 1.8820 GBP/NZD 2.3381 EUR/USD 1.1652 GBP/ZAR 23.2340 |