By Paul Newfield 
Recently we have seen the Pound perform outstandingly against the Euro, with rates higher than they have been for around 16 months and are close to approaching the 2-cent higher position of the best GBPEUR rates since the Brexit vote of over a decade ago.
Recent political and economic issues throughout Europe, and particularly in France, have caused the Pound to soar. Divergent economic data, relative interest rate expectations and Eurozone specific headwinds such as fiscal concerns in many countries and again, notably in France, as well as elevated energy prices, have all gone in the Pound’s favour.
Recent PMI and CPI data from the Uk has been a positive for the Pound; the BoE has priced in a November interest rate hike, with further tightening going into 2027 and possibly beyond. These hikes are set to be more bullish than those set to be offered by the ECB and so the Pound comes out on top again The IMF has even mentioned that UK economic resistance linked to AI investment has also driven Sterling’s strength.
What does this all mean? Well, it is almost certain that there will be limited further chances for further strength for the Pound so in all likelihood are we seeing a peak with a soon to come drop off in the rates? Or will the Pound continue its climb off the back of past events and data?
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This week’s data consists of multiple critical data releases and announcements, which will certainly provide plenty of opportunities for a storm in the rates and the economy as a whole.
This week:
Tuesday – Durable Goods Orders, US
Wednesday – GfK consumer confidence DE, BoC interest rate decision, FED interest rate decision, UK budget
Thursday – Mortgage Approvals UK, US GDP, EU interest rate decision
Friday – GDP and inflation rates from France and Spain