Home Daily Commentaries Tensions in the Middle East dominate financial markets

Tensions in the Middle East dominate financial markets

Daily Currency Update

Sterling fell against the Euro and the Dollar last week. Recent economic data from the UK has been mixed, however, inflation remains stubbornly high leaving the Monetary Policy Committee with a difficult interest rate decision on November 2nd. The Euro had a mixed week. It rose vs Sterling and traded sideways vs the Dollar. Bond yields in the Eurozone moved higher last week lending support to the market's view that they also will make no change to interest rates when they meet this week. Economic activity in the US has been robust and this has given the Dollar strong support through October. After last week markets will be watching oil prices, which reached $88 per barrel last week. As the war in the Middle East continues this has led to a flight into “safe Haven” Dollars.

Key Movers

In the UK we have a quiet week for economic data so it is likely that weaker Sterling sentiment will continue through the rest of October. The primary driver of this has been weaker economic data and stickily high inflation. 


The ECB is expected to leave interest rates unchanged, but it is the rhetoric from the ECB council that will be watched for signs that they are now at the end of the rate hike cycle or if they suggest they are only pausing to watch how economic data fares in the coming weeks. The US Federal Reserve also decides on interest rate policy and markets also expect them to leave rates unchanged. US Q3 GDP data is due this week and this combined with tensions in the Middle East and the release of Earnings from Mega stocks in the US will lead direction for the US Dollar this week. 

Expected Ranges

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  • GBP/EUR: - ▲
  • GBP/AUD: - ▲
  • EUR/USD: - ▲