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Market volatility expected to rise this week

Global stocks in the red after Hamas attacks Israel. Rising geopolitical concerns strengthens USD...



Last week provided some respite for Sterling sellers, after an extended period of decline against the G10. In the last 7-days; £ v € has gained 0.15% & £ v $ has risen 0.10%. Not even worth mentioning really, but at least the pause button was hit after a punishing few weeks. There was just a 0.7% trading range in GBP v EUR last week, to highlight October has been a complete non-event so far. 

That will change this week though, as there are a couple of key releases to get the market moving. The UK GDP number is the main one on offer and the forecasts are for an upbeat August growth. As always, anything less will be £ negative and anything more will be £ positive. 

We also have 2 BoE speeches on Thursday & Friday that are worth noting. First up is Chief Economist Huw Pill who is expected to talk about the Bank's desire to see UK interest rates elevated for an extended period. Then Governor Andrew Bailey is due to speak about inflation, where we expect to hear him say the inflation battle has not yet been won. 

The Euro remains range-bound against the Pound and under pressure versus the Dollar. The Euro-Zone has nothing of note being released this week and isn't effected (as yet) from the Hamas attack and so will play the 'sitting duck' role throughout this week. 

The Dollar did see a slight push-back from all the majors towards the back-end of last week, but those losses have pretty much all been regained since the weekend. Geopolitical concerns mean investors will flock to safe-haven assets and as the USD is one, it will immediately gain in value. 


It's way too early to tell what happens exactly to markets now after the Hamas attack 3-days ago, but the initial reports suggest nothing too concerning will occur. It is another headwind though and one that works in favour of USD. Markets will wait on how Iran & Saudi Arabia react and what the US does in retaliation, before placing positions.

US inflation data on Thursday is a market mover and will determine the near-term value for GBP v USD..