Sterling has burst through to its best since June 2025 against the euro this morning, a rise of 1.5% in the past week. It follows heavy selling of the euro in Asian trading early today, with USD/EUR also at its best since spring 2025, close to 4% up in the past month.

The pound strengthened against the dollar on Friday after weaker-than-expected US jobs figures (Non-Farm Payrolls) dented confidence in another Federal Reserve interest rate rise, but those gains have been reversed this morning.

Nevertheless, the American jobs machine has wobbled. US employers added just 29,000 jobs in September, well below expectations, while unemployment edged up to 4.2% and wage growth slowed. All with the Midterm elections just one month away. Even so, GBP/USD remains 2% down on last month and has resumed its decline this morning.

Oil remains the biggest threat to the global economy, with Brent Crude still over $100 per barrel. The oil producers group OPEC+ agreed on Sunday to keep production steady in November, thus keeping the price high. Diesel prices in Britain are already at record levels, around £2 per litre. That feeds into exorbitant transport and other costs for business, which are bound to be passed onto households.

Europe is certainly feeling this. Eurozone inflation rocketed upwards to 3.8% last month, its highest in three years, from 3.2% in August. ‘Core inflation’ with fuel and fuel removed was a more manageable 2.5%, but the European Central Bank faces higher prices at the same time as concerns over government finances, particularly in France, have unsettled bond markets. That’s what caused the sell off which has so benefitted sterling this morning.

Britain itself enters the week in slightly calmer shape, although the FTSE100 remains 2.5% down on last week. Attention is now turning towards the Budget, in a little over three weeks.

Monday’s economic diary is relatively light, but PMI figures from Britain, Europe and the United States should provide the first test of the new week. Markets will want to know whether America’s jobs slowdown is becoming a wider loss of momentum, or whether Friday was simply one weak number.