26 August 2025

GBP

It’s a quiet week for UK data, but that doesn’t mean sterling will be spared from volatility. With no major economic releases scheduled, markets are likely to be driven by broader headlines - particularly those surrounding the upcoming Autumn Budget and Spending Review on 30 October.

Concerns are mounting over potential changes to income tax, wealth tax, and inheritance tax, with Chancellor Rachel Reeves expected to make early statements that could pre-empt market reaction. Investors remain wary of a repeat of the 2022 mini-budget scenario, which triggered a sharp selloff in the pound and sent it to multi-year lows against G10 currencies.

The current environment means sterling could be especially sensitive to political developments. If the government signals bold changes to tax policy or public spending, investors may react cautiously, potentially pulling back from the pound and triggering renewed volatility.

EUR

The eurozone also enters the week with a light data calendar. The only notable releases are German retail sales on Friday, followed by the latest CPI inflation figures, which are expected to tick up slightly from 2.0% to 2.1% for the shared currency region. While this modest rise is unlikely to concern the European Central Bank, it will be watched closely for signs of inflation persistence.

The ECB continues to target a general 2% inflationary position across the bloc, and unless the data surprises significantly, policy expectations are unlikely to shift.

Elsewhere in Europe, Switzerland’s Q2 GDP is forecast to drop from 0.5% to 0.1% on Thursday, representing a sharp deceleration that could reinforce the Swiss National Bank’s cautious stance and add to the broader narrative of economic fragility across the region.

USD

The dollar remains under pressure, although it appears politics, rather than any data releases, is driving the currency’s trajectory.

This week’s economic releases, Q2 GDP revision on Thursday (expected to rise from 3.0% to 3.1%) and the Federal Reserve’s preferred inflation measure, PCE, on Friday (forecast to edge up from 2.8% to 2.9%), are both unlikely to shift the narrative significantly.

Instead, markets are focused on President Trump’s decision to remove Federal Reserve Governor Lisa Cook, citing misconduct over mortgage-related comments.

Cook was one of the policymakers who voted to pause rates at the last meeting, and her dismissal raises fresh concerns about the Fed’s independence, especially given Trump’s ongoing push to accelerate rate cuts and his previous statements regarding the Fed’s Chair, Jerome Powell.

Adding to the North American picture, Bank of Canada Governor Tiff Macklem is scheduled to speak today on future economic plans, followed by Canada’s Q2 GDP on Friday. Any signs of divergence between Canadian and US policy could influence USD/CAD positioning.

Political interference in monetary policy seems to be unsettling markets and could weigh further on the dollar, particularly if expectations for a September rate cut begin to fade.

AUD

The Australian dollar has been active following the Reserve Bank of Australia meeting minutes released on Tuesday. Despite a recent 25bps rate cut, the central bank signalled that further easing may be needed ‘in the coming year.’ This dovish tone comes ahead of Wednesday’s CPI release, expected to show inflation rising from 1.9% to 2.3%.

The RBA appears willing to look through short-term inflation fluctuations in favour of supporting growth, which could keep the AUD under pressure.

JPY

Japan’s CPI release on Thursday will be closely watched for any signs of upward pressure. While expectations remain muted, any surprise could challenge the Bank of Japan’s ultra-loose policy stance. For now, the BoJ remains committed to accommodative measures, and the yen continues to trade as a safe-haven asset in a politically charged global environment.

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.