13 October 2025

USD: Trump arrives in Middle East as hostages are released; Budget shutdown continues

President Trump arrived in Israel early this morning, shortly after Hamas released the first seven Israeli hostages under the terms of the recently brokered peace agreement.

All remaining living hostages have now been released, with 2,000 Palestinian prisoners to be exchanged in return for all of the hostages, alive or deceased. Some recent declines in oil prices, prompted by the peace deal, have been reversed today, but the downtrend remains intact. Should tensions continue to ease, further downward pressure on oil prices remains possible - typically a supportive factor for the US dollar.

Meanwhile, the US budget shutdown persists. The Senate is not expected to vote again until Tuesday, and the House remains out of session. One notable update is confirmation that the Bureau of Labor Statistics intends to release September CPI data on 24 October, ahead of the Federal Reserve’s next policy meeting.

President Trump also signalled a willingness to resume dialogue with Chinese Premier Xi, suggesting that previously threatened tariffs may not materialise. Federal Reserve Chair Jerome Powell is scheduled to speak tomorrow (Tuesday), ahead of the pre-meeting blackout period for the 28–29 October FOMC.

GBP: UK labour market figures in focus this week – potential support for GBPEUR higher?

This week’s UK labour market data for August and September will be closely watched. Indicators such as August LFS employment, job vacancies, and the ILO unemployment rate may point to continued weakness in labour demand.

However, HMRC payrolled employee figures for September could show a deceleration in job losses, offering a more constructive signal. These figures will be particularly relevant in assessing the impact of recent National Insurance changes, which have coincided with a reduction of approximately 200,000 jobs.

A stabilisation, or improvement, in labour market conditions could provide support for sterling, particularly against the euro.

Thursday’s GDP and industrial production data for August may also offer insight into whether the economy is recovering from July’s stagnation. In addition, several Bank of England speakers are scheduled this week, including Mann (Monday), Taylor and Bailey (Tuesday), Breeden (Wednesday), Greene (Thursday and Friday), and Pill (Friday).

EUR: Macron reappoints Lecornu; Will October German ZEW indices may diverge

In France, President Macron has reappointed Lecornu as Prime Minister, despite his earlier failure to secure parliamentary support for the 2026 budget.

The government now faces a strategic decision: either proceed with the current budget proposal, which is unlikely to pass, or make concessions to the left-wing coalition, which may raise concerns among investors. In the short term, risks to the euro remain tilted to the downside.

Elsewhere in the euro area, the October German ZEW survey is expected to show a decline in current conditions but an improvement in expectations. While markets may respond positively to signs of future optimism, the euro could struggle to maintain gains given the weakness in present indicators.

It is worth noting that the ZEW survey, based on responses from financial market professionals, has historically offered limited predictive value for broader economic performance.

IMF World Economic Outlook due this week

The International Monetary Fund is scheduled to release its latest World Economic Outlook this week, providing updated global growth forecasts and commentary on key macroeconomic risks.

Author 

Views expressed in this commentary are those of the author, and may differ from your appointed Moneycorp representative. This commentary does not constitute financial advice. All rates are sourced from Bloomberg and forecasts are taken from Forex Factory.