🇬🇧 GBP — The UKBudget Comes Into Focus

The 28 October Budget is becoming an increasingly importantevent for sterling. UK government borrowing reached £18.3bn in August,exceeding expectations and adding pressure on the Chancellor to demonstratecontrol over the public finances.

Markets are watching for potential tax increases, includingpossible changes to property and wealth-related taxes, alongside measures toaddress rising energy costs. Economists are also concerned that highergovernment borrowing costs have reduced the Chancellor's financial headroom.

The Bank of England remains another factor, with persistentinflation keeping the possibility of interest rates staying higher for longerin the conversation.

What to watch this week:

• UK economic data and     Bank of England commentary.
• Gilt yields and further     Budget speculation.
• Whether markets remain     confident in the UK's fiscal outlook.

FX outlook: A credible Budget could support sterling, whileconcerns over borrowing and taxation could weigh on sentiment.

🇪🇺 EUR — FrenchDebt Remains a Pressure Point

France continues to attract attention as investors questionhow quickly the government can reduce its deficit. The gap between French andGerman borrowing costs has widened significantly, reflecting concerns overFrench debt and political uncertainty.

The government's proposed budget aims to reduce the deficitfrom around 5.4% to 5.0% of GDP, through spending cuts and additional revenue.However, political divisions could make those measures difficult to pass infull.

Meanwhile, higher eurozone inflation complicates the ECB'sposition, limiting its flexibility if economic growth weakens.

What to watch this week:

• French budget     negotiations and political developments.
• French and German bond     yields.
• Eurozone inflation     expectations and ECB commentary.

FX outlook: Further fiscal uncertainty in France could weighon the euro, particularly against sterling, although developments in the UKcould also influence GBP/EUR.

🇺🇸 USD — WeakJobs Data Raises Questions

The US added just 29,000 jobs in September, whileunemployment rose to 4.2%. The weaker figures have prompted markets to reassessthe likelihood of further Federal Reserve rate increases.

If the labour market continues to weaken, expectations oflower interest rates could put pressure on the dollar. However, elevated USTreasury yields and demand for safe-haven assets could continue to providesupport.

The Fed therefore faces a difficult balance between slowingemployment and persistent inflation risks.

What to watch this week:

• Federal Reserve meeting     minutes and policymaker comments.
• Further US economic and     labour-market data.
• Treasury yields and     expectations for the next rate decision.

FX outlook: Further signs of economic weakness couldundermine the dollar, although persistent inflation or increased globaluncertainty may limit its downside.

What We're Watching This Week

GBP — Budget expectations

Borrowing costs, possible tax changes and the Bank ofEngland's next move.

EUR — French fiscal risk

Budget negotiations and the risk of further pressure onFrench bonds.

USD — The Fed and employment

Whether weaker jobs data changes the outlook for US interestrates.

Overall, government finances, inflation and interest-rateexpectations remain the main drivers as October begins. The approaching UKBudget, uncertainty in France and the changing outlook for US monetary policycould all create further volatility for businesses with upcoming currencyrequirements.

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