Sterling starts the week close to its strongest against the euro in 19 months, the highest since March 2025, after last week’s Bank of England rate rise. This week’s US inflation figures on Tuesday and UK growth figures on Thursday could decide where it goes next. Below, we look at what could move each pair over the next week or two.
Latest market insights:
GBP to EUR: holding near a 19-month high after the Bank of England rise
- Sterling was little changed against the euro last week, down around 0.1%, holding close to its 19-month high. Against a broad basket of currencies, it reached its strongest level since the Brexit referendum in 2016, according to the Bank of England’s own measure, so the strength is not just against the euro.
- On Thursday, the Bank of England raised its interest rate from 3.75% to 4% on an 8 to 1 vote, its first rise since 2023. The one dissenter wanted a bigger rise to 4.25%. The Bank now expects UK inflation to climb to nearly 5% by the middle of next year, but Governor Andrew Bailey said the rise should not be seen as the first in an inevitable long sequence, and some policymakers suggested the total tightening could be smaller than markets had been pricing. Sterling was roughly unchanged afterwards.
- That puts Thursday’s UK growth figures in focus. Economists expect growth of around 0.7% for the third quarter, which largely confirms what is already known, but the figure for September alone is expected to be flat. Stronger numbers could support sterling by backing the case for further rate rises. Weak ones, with inflation expected to rise, could raise worries about growth and take some of the shine off the pound. After such a long climb, a pullback is also possible without bad news. Next week, UK jobs and wages figures on Tuesday 17 November and UK inflation for October on Wednesday 18 November will be the next big tests.
- The euro, meanwhile, remains under pressure from worries about France’s finances, even though eurozone inflation hit 4% in October, its highest in three years, driven by energy costs. Markets see a rate rise from the European Central Bank in December as more likely than not.
- With US inflation and UK growth figures both due this week, sterling could move 1% in a few days. On a €400,000 purchase, that is around £3,400 either way, 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: a new Congress, a firm jobs report and US inflation next
- Democrats won control of both the House of Representatives and the Senate in last week’s US midterm elections. The House result was widely expected, while the Senate was less certain beforehand. The dollar slipped as the uncertainty cleared, in its biggest daily fall in three weeks, and US government borrowing costs dipped on expectations that a divided government could limit new spending and borrowing.
- That move was partly reversed on Friday, when the US jobs report showed employers added 165,000 jobs in October, well above expectations. It revived hopes of a Federal Reserve rate rise in December and lifted the dollar, which ended the week higher.
- This week’s main event is Tuesday’s US inflation figures for October. Economists expect prices to have risen by around 0.3% on the month, with the measure that strips out food and energy at around 0.2%. A hotter reading would back the case for a December rise and could lift the dollar further, while a softer one could give the euro room to recover. US wholesale price figures on Friday and a busy run of Fed speakers add to the picture.
GBP to USD: a faded bounce, with two tests ahead
- Sterling slipped around 0.5% against the dollar last week. It had risen for several days into the Bank of England’s decision, reaching its highest level since mid-September, but the bounce faded once the strong US jobs report lifted the dollar.
- This week brings two tests in quick succession: US inflation on Tuesday, then UK growth on Thursday. Soft US inflation together with firm UK growth could favour sterling, while hot US inflation and weak UK growth could favour the dollar. As ever, none of this can be predicted with certainty.
What to watch this week:
Tuesday 10 November:
- US inflation figures for October. Fed policymakers also speak throughout the week.
Thursday 12 November:
- UK economic growth figures for the third quarter and for September.
Friday 13 November:
- US wholesale price figures 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.
