UK PM Starmer has opened the government’s investment summit with the reassurance that Labour will restore the UK’s brand as an open, trading nation. The inference is that the UK has appeared less open in recent years, which may be a reference to Brexit, Rabobank’s FX analyst Jane Foley notes.

Market is expecting the pace of earnings growth to moderate

“This week’s releases of UK labour and CPI inflation data are expected to be key in forming market expectations ahead of the BoE’s November 7 policy meeting. The market is expecting the pace of earnings growth to moderate.”

“While CPI inflation readings are also expected to moderate in September, the consensus is pointing to a still ’too high’ reading of 5.2% y/y for services inflation. On the back of this, Rabobank maintains its view that the BoE is likely to cut rates at a gradual pace of once a quarter. The relatively slow pace of BoE rate cuts should garner GBP some support going forward.”

“However, neither of the US presidential candidates have yet dared to mention budgetary prudence. The likelihood of more deficit spending in the US, particularly under Trump administration, could slow the pace of Fed rate cuts and provide support for the USD (as could Trump’s tariff pledges). Consequently we see limited upside potential for cable going forward.”