Sterling starts the week at its strongest against the euro in around eighteen months, ahead of a Bank of England decision on Thursday that is widely expected to bring a rate rise. The US midterm elections on Tuesday and the US jobs report on Friday could also move markets. Below, we look at what could move each pair over the next week or two.
Latest market insights:
GBP to EUR: an eighteen-month high ahead of the Bank of England
- Sterling rose around 0.4% against the euro last week to its highest in around eighteen months. The euro has been under pressure from worries about France’s finances, with French government borrowing costs at their highest in around two decades and its economy contracting. On Thursday, European Central Bank President Christine Lagarde also announced that she will step down in February, adding another uncertainty at the top of the eurozone’s central bank. The UK Budget passed with little reaction in markets, as Chancellor John Healey’s borrowing plans matched what investors expected, though the independent forecaster also cut its UK growth outlook for 2027, which limits how far sterling’s gains can run.
- This week’s main event is Thursday’s Bank of England decision. Markets expect the Bank to raise its rate from 3.75% to 4%, with some policymakers expected to prefer waiting, and it will publish new forecasts at the same time. The rise itself is largely priced in, and markets already expect several more increases over the coming months. That means the Bank’s message on how far it is willing to go could matter more than the decision. A signal that further rises are likely could support sterling, while a more cautious tone could take some of the shine off it. After such a long climb, a pullback is also possible without bad news.
- Looking to next week, UK economic growth figures for the third quarter are due on Thursday 12 November. Stronger numbers could back the case for further rate rises and support sterling, while weaker ones could do the opposite.
- Sterling is near its strongest against the euro in eighteen months, but rates can turn quickly. On a €400,000 purchase, a 1% fall in sterling would add around £3,400 to the cost, which is a significant sum to have to find at short notice. This is the kind of movement that can happen, in either direction, between agreeing a purchase price and completing. Our currency specialists work with clients to plan for it rather than guess where rates will go. A rate order lets you set the rate you would like to trade at, and acts on it automatically, so you do not have to watch the market. A forward contract fixes a rate for your completion date, so you know exactly what you need, though you would not benefit if rates moved in your favour. Both can involve a deposit and are worth discussing with a specialist in the context of your own timeline. Call us on +44 (0)204 506 5672 to talk through your options.
USD to EUR: the dollar eases, with US jobs in focus
- The dollar slipped after the Federal Reserve kept interest rates at 3.75% to 4% last week. Two policymakers voted for a rise, and Chair Kevin Warsh left a December rise open without promising one. The euro touched its lowest against the dollar since May 2025 on Thursday before steadying.
- This week, US midterm elections on Tuesday could shift control of Congress, which markets may read as a signal for US government spending and borrowing. Friday’s jobs report is likely to matter more for the dollar, because it feeds directly into hopes for a Fed rate rise in December. A strong report could lift the dollar, while a weak one, like September’s, could pressure it. For the euro, Wednesday’s eurozone inflation estimate for October could shape expectations for a European Central Bank rate rise in December. Next week, US inflation figures on Tuesday 10 November are the next big test for the dollar.
GBP to USD: a second weekly gain, with two big tests
- Sterling rose around 0.3% against the dollar last week, its second weekly gain in a row, helped by a calm reaction to the Budget and expectations of a Bank of England rate rise.
- This week, Thursday’s Bank of England decision is the main driver for this pair, followed by Friday’s US jobs report. A rate rise with a firm message from the Bank could support sterling. A strong US jobs report could lift the dollar and weigh on it, while a weak one could do the opposite. As ever, none of this can be predicted with certainty.
What to watch this week:
Tuesday 3 November:
- US midterm elections.
Wednesday 4 November:
- Eurozone inflation estimate for October.
Thursday 5 November:
- Bank of England rate decision and new forecasts. A rise from 3.75% to 4% is widely expected.
Friday 6 November:
- US jobs report for October.
If you have an international transfer coming up in the next few weeks or months, for a property purchase, a pension payment, supporting family abroad, or any other reason, the events of this week are a useful reminder that exchange rates can move quickly, and not always in the direction you’d hope.
The good news is that you don’t have to simply wait and see what happens. Speaking with a currency specialist costs nothing and carries no obligation. They can talk you through your options, including spot contracts for transfers you need to make now, and forward contracts for transfers you’re planning further ahead, and help you understand how today’s rate movements might affect your specific situation.
Contact Lumon on +44 (0)204 506 5672 for a free, no-obligation conversation and discover what options you have available to help.
