Last week further demonstrated the sensitivity of sterling to Brexit negotiations. Developments from Thursday onwards highlighted responsiveness as the currency traded between a 150-pip range as positive and negative headlines hit the wires. Sterling was boosted by news that UK PM Boris Johnson and EC President Ursula von der Leyen agreed that talks will continue to “close significant gaps”. Brexit headlines are likely to continue to dictate sterling movements.

We saw the headline Euro-zone CPI inflation rate declined below expectations to -0.3% for September from -0.2% previously. The core rate (excluding food and energy) also declined to 0.2% from 0.4% also below market expectations of 0.5%. This was the lowest core reading since the Euro was introduced and will reinforce pressure for the ECB to take additional action to underpin both reported inflation and inflation expectations.

The end of the week resulted in some unexpected news as President Trump released the news that he and the first lady had contracted COVID. Concerns heightened over the weekend as they were taken to hospital. News has since been inconsistent. The market will be focused on when he is discharged (rumoured to be early this week) and what the potential implications are on the next TV debate, voting behaviours and the net impact on the election.

Looking to the week ahead, the market will be once again focused on Brexit trade talk developments as we approach the EU summit on the 15th of October. In the meantime, the situation surrounding President Trump is likely to dominate global headlines.


  • UK PMI Services (final reading)
  • Eurozone Retail Sales
  • US ISM Non-Manufacturing

Following the weekend’s agreement surrounding extending the conversations on Brexit trade talks. Economic activity in the UK, EZ and US will be monitored. Service sector data will be released from the UK and US whilst consumer spending will be released in the Eurozone.


  • ECB Lagarde Speaks
  • US JOLTS Job Data
  • FOMC Chair Powell Speaks

The focus will be on the rhetoric from ECB President Lagarde. The market focus will be on comments surrounding inflation and the strength of the currency. Last week we saw Eurozone core inflation Euro drop to its lowest level since the single currency was introduced. This will reinforce pressure for the ECB to take additional action to underpin both reported inflation and inflation expectations. Likewise, the market will also keep a close eye of FOMC President Powell to see if he gives any clues on future policy action.


  • UK Halifax House Prices
  • ECB Lagarde Speaks
  • FOMC Meeting Minutes

UK house prices have seen a bit of a resurgence since the stamp duty holiday was introduced, given the recent increase in new COVID cases and tighter restrictions, the market will see if the positive activity has continued in this sector. ECB President Lagarde is speaking for the second consecutive day and her comments will be closely monitored for clues on future policy action. The FOMC minutes will also provide the market with some food for thought on how they perceive the new regime on averaging inflation over an unspecified period.


  • BoE Bailey Speaks
  • US Jobless Claims

BoE Gov Bailey is due to participate in an online panel discussion at the Single Resolution Board’s annual conference. Following the mixed messages on the use of negative interest rates as a policy option for the central bank, the market will decipher his comments to determine the probability of this being implemented. The employment sector always gathers attention during an election campaign so the weekly jobs numbers will be watched.


  • UK Monthly GDP
  • UK Industrial Production
  • UK Manufacturing Production 

With the focus on the UK economic activity, the monthly GDP will be closely monitored for momentum. The pace of expansion is expected to decline but remain healthy. Following this, we also have the industrial and manufacturing production numbers due for release.

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