'Dead rubber' of a week ahead

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waterman
Written by Dan Waterman
August 26th 2025
No major domestic calendar events due this week..

The FX market is expected to see the final days of August play out with low volatility, which 'could' be somewhat beneficial to GBP.

"Carry trade" is where currencies that are home to high interest rates outperform during calm and/or low liquidity times. The UK/£ is one of the highest yielders in the developed world and so we may see Sterling improve this week.

£-$ rose 1% last Friday after comments by Fed Chair Powell at Jackson Hole.

The main headline read 'the balance of risks appear to be shifting', suggesting the Fed will now turn its attention towards employment and away from inflation. The data suggests this may have come a little late (nothing new here) and he may have finally caved into President Trump's demands (unlikely). 

Still, the $ devalued across the board as chances of a US interest rate cut rose for next month and US stocks rallied. Remember, what the US does usually has direct ramifications for the UK. UK/US interest rates are very rarely more than 0.5% away from each other.

Trump's dismissal of Fed Governor Lisa Cook after allegations of mortgage fraud is major news, but has yet to affect financial markets, I guess because of the many legal hurdles that lie ahead with the decision. The Fed's independence to the US government is crucial to the world as a whole, so potentially a real concern this one if it goes ahead.