ECB Rate Decision and UK Inflation Take Centre Stage This Week

GBP

GBP/USD is currently trading at 1.3065 (interbank), while GBP/EUR stands at 1.1953 (interbank).

The UK is preparing for Labour's first Autumn Budget at the end of the month, with expected changes to Inheritance Tax, Capital Gains Tax, and VAT exemptions.

This week, attention turns to the September inflation report due on Wednesday. Annual inflation has held steady at 2.2% over the past two months, and the BoE kept interest rates unchanged at 5% in September following its first rate cut in four years in August.

Strong economic data and persistent inflation may encourage the BoE to maintain a hawkish stance, which could support the pound.

UK employment data will be released tomorrow, and retail sales data for September will be published on Friday.

No significant events are scheduled for today.

EUR

EUR/USD remains steady, currently trading at 1.0928 (interbank).

This week, the ECB is expected to lower its key policy rates by 0.25% on Thursday, marking its third rate cut this year, following reductions in June and September.

Although the ECB maintained a hawkish tone during its September meeting, recent data has supported further easing.

The combination of a weakening economy and falling inflation has increased the likelihood of a faster rate-cutting cycle, potentially bringing the deposit rate down to 3% by the end of the year.

Other key data this week includes the final Eurozone Consumer Price Index (CPI) for September, due on Thursday.

No significant events are scheduled for today.

USD

The Dollar Index, which tracks the U.S. dollar against a basket of six major currencies, stands at 103.03, its highest level since mid-August, as traders reduce bets on larger rate cuts by the Federal Reserve.

Last week's data showed consumer inflation slightly hotter than expected, while jobless claims were higher than anticipated.

This has maintained expectations for the Fed to cut rates by 25 basis points in both November and December.

Later today, Fed Governor Christopher Waller is due to speak, having previously supported a larger rate cut over concerns that inflation is undershooting the Fed's target.

U.S. economic data releases will be relatively sparse this week, with the key focus on September retail sales figures due on Thursday.

Today’s Events (GMT+1):

14:00 - FOMC Member Kashkari Speaks? ????????? ??????????????? ??????????????? ???????????????

20:00 - Fed Waller Speaks? ?????? ??????????????? ??????????????? ???????????????

22:00 - FOMC Member Kashkari Speaks

CAD

USD/CAD is higher, currently trading at 1.3781 (interbank), close to its highest level since 7 August.

On Friday, Canada added a net 46,700 jobs in September, and the unemployment rate unexpectedly fell for the first time in eight months to 6.5%, dampening expectations of a 50 basis-point rate cut this month.

The positive jobs data may ease concerns about slack in Canada’s labour market and reduce the likelihood of larger-than-usual rate cuts by the central bank.

The BoC is still expected to cut rates at its next announcement on 23 October.

The focus this week will be on Canada's inflation data for September, due tomorrow. The inflation report is the last key economic data release before the BoC's interest rate decision.

Additionally, oil prices have fallen, with Brent crude down to $77.78 a barrel and West Texas Intermediate at $74.31, following discussions of a potential ceasefire in the Middle East.

No significant events are scheduled for today.

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