Sterling opens the new week close to its weakest in a month against the euro as the threat of high inflation continued to dominate proceedings.

We’ll have to wait until next week to hear the latest decisions from the Fed and the Bank of England. The European Central Bank (ECB) is expected to announce its second rate hike of the year when Christine Lagarde and co step up first on Thursday lunchtime, meaning there could be real movement in the pound to euro rate.

The US dollar benefitted from a booming set of jobs data before the weekend, which showed the economy added more than 100,000 additional jobs than expected in August. Unemployment also held steady, in theory boosting the odds that the Federal Reserve would feel able to raise interest rates at its next meeting. It should be noted that President Trump argued for the opposite course of action on his Truth Social platform.

For the UK, the main highlight will be July’s preliminary GDP release. Currency markets will be watching closely for signs that a historically hot summer, coupled with England’s performance in the World Cup, boosted economic activity after strong performances back to back.

Most of this week’s action is focused on Europe and the United States, however. German trade figures are due tomorrow, while the US economy reports inflation data along with the influential Michigan consumer sentiment study on Friday.

Germany’s far-right Alternative für Deutschland (AfD) secured a major win in Saxony-Anhalt on Sunday. Chancellor Friedrich Merz’s party secured just 17% of the vote, and while the AfD will likely fall short of achieving a complete majority in the regional government, it piles more pressure on the unpopular Merz as he attempts to kickstart a sputtering economy.

And there was still time for a little political intrigue at home, too. Several of Reform UK leader Nigel Farage’s senior advisors left their roles before the weekend after a sting investigation into the source of its donations. Farage acknowledged the allegations ‘didn’t look good’ but denied any laws had been broken.