Money News Overview Tuesday 3rd October 2023: GBP’s tide is changing

Market Update: Quiet Markets as Focus Shifts to PMI Releases

The British Pound is projected to struggle versus the Euro in October as the fallout from a difficult September persists, but weakness will be limited given that the Eurozone and UK economies are unlikely to change direction.

The Euro and Dollar have both fallen heavily against the Dollar in the August-September period, due to ongoing US economic outperformance, leaving both at jeopardy of extending their losses against the Dollar and underlining the relevance of the matter of economic divergence for the FX market.

The US manufacturing ISM remained in contraction mode in September, but it printed ahead of expectations. It increased to 49.0 (vs. 47.8 forecast) its highest level since November of last year. In the meantime, the Eurozone unemployment rate fell to 6.4% in August.

On the currency front, the dollar was firmly in the lead. The mediocre tone in risk appetite and the Fed’s hawkish rhetoric strengthened the greenback.

Today’s major release will be August job vacancies statistics in the United States. The number of open positions is expected to fall slightly. Lane’s comments as ECB Chief Economist will also be of interest.