Currency markets enter the new week with the dollar firmly in control, sterling showing resilience and the euro struggling to regain momentum. Escalating tensions in the Middle East, changing interest rate expectations and growing European fiscal uncertainty continue to shape trading conditions. The dollar has now advanced for four consecutive weeks, its longest winning run since 2025, while rising energy costs and persistent inflation concerns are reinforcing demand for the greenback. Despite the strength of the dollar, currency performance remains uneven, with sterling outperforming the euro as investors reassess the relative economic and political outlook across major markets.

Currency markets are ending the week on a cautious footing, with shifting interest rate expectations, rising energy costs and renewed political uncertainty driving a clear divergence between the major currencies. The US dollar continues to attract demand as investors favour its yield advantage, while the euro struggles under mounting fiscal pressures and sterling remains caught between attractive interest rate differentials and deteriorating global risk appetite. Higher bond yields and concerns over inflation are complicating the outlook for central banks, leaving FX markets increasingly sensitive to economic data and geopolitical developments. With volatility building across energy and sovereign debt markets, the next move in currencies could prove more decisive than the relatively contained trading ranges suggest.

Currency markets are navigating an increasingly difficult landscape as rising bond yields, geopolitical tensions and mounting fiscal concerns reshape investor positioning. The dollar remains firmly in favour, supported by attractive US yields and renewed demand for defensive assets, while the euro continues to struggle under the weight of political and fiscal uncertainty in France. Sterling has emerged as a relative outperformer, particularly against the single currency, although its progress against the dollar remains limited. With global equities retreating from record highs and volatility beginning to return, investors are becoming more selective about where they seek both yield and stability.

FX markets are starting the session with a mixed but relatively orderly tone. The dollar is softer after an improved session for bonds helped US equities reach fresh highs, while sterling remains firm and the euro is attempting to stabilise as French sovereign stress eases. Energy remains an important cross-market driver, with Brent rebounding after briefly dipping below $100 a barrel. Higher oil prices continue to complicate the inflation outlook and are limiting the scope for a sustained rally in global bonds.

FX markets are starting the week with a clearer split across the majors. The euro remains under pressure as French political and fiscal concerns spill into bond markets, sterling is holding firm on increasingly hawkish Bank of England expectations, while the dollar continues to attract support from higher yields and a relatively resilient US backdrop. Risk appetite remains healthy enough to keep some higher-beta currencies supported, but the bigger story is the widening divergence in rate expectations across the US, UK and euro area.

FX markets have started the week with a distinctly defensive tone, with investors favouring currencies offering either yield support or traditional safe-haven characteristics. The dollar remains close to its 2026 highs, but the broader move is not simply a dollar story. The Swiss franc and Japanese yen have also strengthened against the euro, while sterling has outperformed the single currency as investors reassess relative fiscal and political risks across Europe.

FX markets saw a meaningful shift in momentum yesterday, with GBP/EUR back trading above 1.17 as sterling benefited from attractive UK yields and renewed pressure on the single currency. The euro was the clear underperformer as concerns around French government debt intensified, while the dollar remained relatively firm and the Swiss franc attracted defensive demand. Across the wider market, attention has shifted back towards interest-rate expectations and the growing divergence between the US, UK and euro area.

FX markets begin the fourth quarter with the dollar firmly in control, backed by rising US yields, resilient American growth and a widening rate advantage over its major peers. Sterling has held up better than the euro, helped by easing domestic political concerns and renewed discussion around closer UK-EU ties, while the single currency remains under pressure from a combination of French fiscal risk, higher energy costs and the relative strength of the US macro backdrop. With global bond yields elevated and central banks still leaning hawkish, interest-rate differentials remain the dominant force across G10 currencies.