By Noam Bennaiche
The global FX markets are in a holding pattern today, as investors refrain from taking large positions ahead of today’s keynote speech from Federal Reserve Chair Kevin Warsh. His first at the annual Jackson Hole symposium and the most closely watched central bank speech of the year.
Sterling has pulled back from the six-month highs reached last week, with GBP/USD now weighed down by a recent decline in Brent crude prices, that eased inflation concerns and prompted markets to push expectations for the next Bank of England rate hike into 2027, from late 2026.
GBP/EUR is retreating modestly from the stronger levels seen in mid-August but still well above the year’s lows. The backdrop for Sterling remains fundamentally supportive. The MPC’s most recent vote was a 6–3 split, with three members already pushing for a hike, a hawkish undercurrent that continues to provide support for Sterling.
The Euro is steady, but directionless for now. The ECB’s July Monetary Policy Meeting Accounts gave some indication; “while decisions remained data-dependent, another rate hike would likely be necessary, unless the inflation outlook improved significantly,” the ECB said. The single currency has been range-bound for most of August, caught between an ECB that has already hiked once this year and a growth backdrop in the Eurozone that remains fragile. The next ECB decision is on 10th September.
Yesterday, US Initial Jobless Claims came in at 203,000, falling for a second consecutive week and pointing to a less resilient labour market. The biggest news of the week might be the Jackson Hole Symposium today. Warsh’s keynote is expected at 15:00pm GMT, his first Jackson Hole speech as Chair, and the first set-piece opportunity for him to lay out what he thinks, rather than simply what the committee decided. Warsh gave investors limited insight into his economic views after the July policy meeting, avoiding forward guidance on interest rates entirely. Markets interpreted that communication as a lack of clarity on the path back to the inflation target, and long-term bond yields subsequently moved higher. Markets currently price only a one-in-three chance of a September hike. Any hawkish surprise, particularly around the Fed’s reaction function or inflation persistence, could provide a meaningful lift to the Dollar and weigh on both GBP/USD and GBP/EUR. A more neutral or deliberately ambiguous tone would likely see Sterling and the Euro recover some ground.
Today’s session is light on scheduled data. The focus is entirely on positioning. With September central bank decisions from the ECB on 10th, the Fed on 15–16th and the Bank of England on 17th all in the frame, today’s speech from Warsh is the single most important scheduled event before the autumn policy calendar begins.
Volatile markets move fast, and having the right protection in place can make all the difference. Speak to one of our experts today about fixing a rate or protecting your position, and make sure your money goes further.
Key Events
Thursday, 27th August
EUR – ECB July Meeting Accounts at 13:30 GMT
USD – Initial Jobless Claims (weekly) at 13:30 GMT
USD – Goods Trade Balance (July) at 13:30 GMT
Thursday, 28th August
USD – Warsh Jackson Hole keynote at 15:00 GMT
Key dates ahead: ECB 10th Sept | Fed 15–16th Sept | BoE 17th Sept