Rainstone FX Ltd 19th October 2026
A fresh week begins with France back in the headlines after one of the country's worst weekends of unrest in years pushed the euro lower. Elsewhere, the focus shifts to the UK, with jobs and inflation data on Tuesday and Wednesday, followed by business surveys on Friday, all ahead of a very busy end to the month.
Market Recap
EUR: Weekend unrest in France, triggered by cost of living pressures, pushed French bond yields higher and weighed on the euro on Monday, with protests also reported in other European countries. EUR/USD slipped to around 1.1180 from Friday's close near 1.1240, while GBP/EUR continues to edge towards 1.19. The unrest comes just ahead of a key vote in the French parliament on Tuesday on the first part of the 2027 budget, with French borrowing costs already at their highest levels in 24 years. Markets currently see roughly a 50% chance of an ECB rate rise on 29 October, meaning developments in France are carrying extra weight.
GBP: GBP/USD is holding around 1.3330, with sterling remaining firm against the euro as markets wait for UK jobs and inflation data.
USD: The dollar is trading near its lowest levels of the month, with the Dollar Index around 101.8. Markets still see a Fed hold on 28 October as very likely. ING notes the dollar has lost some of its traditional safe haven appeal, as concerns around technology and AI shares have pushed US rate expectations lower despite inflation remaining elevated. Even so, it does not expect a major decline in the dollar from current levels.
CAD: The Canadian dollar continues to find support from elevated oil prices, with inflation figures due later today ahead of the Bank of Canada's decision on 28 October.
Oil and shares: Brent crude eased around 2% to approximately $108 per barrel, pulling back from a five month high but remaining high enough to keep inflation concerns alive. Technology stocks remain in focus following the Nasdaq's worst week since June, with Meta and Tesla both reporting on Wednesday.
Key Events This Week
France comes first. On Tuesday, French lawmakers vote on the first part of the 2027 budget, which the minority government is expected to struggle to pass. A defeat would not end the budget process, but markets will be watching closely for any sign that the government's position is weakening. The euro could react quickly either way.
UK inflation on Wednesday is the main event for sterling. It is expected to rise to 3.4% from 3.1%. A November Bank of England rate rise is already almost fully priced in, so the bigger question is what comes next. Strong services inflation and wage figures could raise expectations of a second rise in December, while softer numbers could have the opposite effect. Tuesday's jobs and wages figures come first, with hiring expected to remain soft and wage growth continuing to cool.
Friday's flash PMIs provide the broadest test of growth this week. Markets will be watching to see whether the eurozone can maintain its recent resilience and how UK businesses are coping with higher prices and uncertainty ahead of the Budget.
Rainstone Insight
Markets are rarely driven by a single event. This week, political developments in France, inflation expectations, central bank commentary and economic data all played a role in shaping currency movements. The challenge for businesses and private clients alike is that these influences often overlap, making exchange rates difficult to predict over short periods.
With several major events still to come before the end of the month, including the UK Budget and a number of central bank decisions, now is a good opportunity to review any upcoming currency requirements and make sure you're well prepared for whatever the market delivers next.
If you would like support with your international payments, get in touch with the Rainstone team. We are watching the markets closely, so you do not have to.
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