• Dollar gains momentum after statements made by Trump.

What Moved the Markets Last Week?

The U.S. dollar recovered slightly on Friday, trimming earlier losses and ending the session with a modest gain. Despite the late rebound, the currency still recorded its weakest weekly performance since early August. Sentiment improved after trade-related tensions between the U.S. and China eased, following Trump’s reassurance: “I think we’ll be fine with China.”

All eyes are on UK inflation data this week, which may play a key role in shaping expectations for future Bank of England rate decisions. Headline CPI is forecast to increase to 4% year-on-year in October, up from 3.8%. A stronger print could ease pressure on the Bank to deliver further rate cuts and may offer near-term support for the pound. Investors will also track public sector net borrowing on Tuesday, especially after August’s figure surpassed £20 billion, raising concerns about the UK’s fiscal position.

Looking ahead to Friday, flash PMI readings from both the UK and Eurozone will provide fresh insight into business activity for October, helping to gauge the health of the broader European economy.

Globally, markets remain sensitive to developments in US-China trade relations, alongside any renewed signs of strain in the US regional banking sector. The delayed September US CPI figures are also due and could either reinforce or challenge the growing market conviction that rate cuts are on the horizon—despite repeated Fed commentary suggesting inflation remains a concern.

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