Pound gains on EU relations while euro slides on French debt worries
The pound (GBP) closed last week on a stronger note, building on earlier gains. Support for sterling came from Prime Minister Andy Burnham’s remarks about improving UK-EU relations, including the possibility of the UK rejoining the bloc. However, the upcoming release of the UK’s services PMI could weigh on the currency if it shows a slowdown in September.
The euro (EUR) faced pressure despite a surge in Eurozone inflation, which hit a three-year high of 3.8% in September. While headline inflation exceeded expectations, core inflation remained steady at 2.5%, suggesting the European Central Bank may keep rates unchanged this month. The euro’s decline deepened as concerns grew over France’s rising debt burden.
The US dollar (USD) weakened after the non-farm payroll report fell short of forecasts, with only 29,000 jobs added in September compared to expectations of 90,000. This dashed hopes of a Federal Reserve rate hike this month. The ISM services PMI could offer some support if it indicates strength in the US private sector.
The Canadian dollar (CAD) ended the week lower as Brent crude prices dropped below $100 per barrel. The currency is expected to remain sensitive to oil market movements. Meanwhile, the Australian dollar (AUD) and New Zealand dollar (NZD) both weakened due to a decline in risk appetite.