The Pound to Australian Dollar (GBP/AUD) exchange rate slipped at the start of the week as renewed US-China trade optimism drove risk-on sentiment and boosted the risk-sensitive Australian Dollar.

DAILY RECAP:

The Australian Dollar (AUD) started the week on the offensive, climbing against most major peers as traders welcomed renewed signs of progress in US-China trade negotiations.

Reports that Washington and Beijing had agreed on a preliminary ‘framework’ deal ahead of the upcoming meeting between Presidents Donald Trump and Xi Jinping lifted market confidence, sending risk assets higher.

Given the Aussie’s close trade ties with China and its reputation as a proxy for global risk appetite, the news fuelled strong demand for the currency — seeing the AUD rally sharply through Monday’s European session.

The Pound (GBP), meanwhile, held largely steady ahead of upcoming UK data releases.

Traders looked to the afternoon’s CBI distributive trades survey for direction, which was expected to show another decline in retail sales activity for October, reflecting softer domestic demand.

However, with no major developments in sight, Sterling’s moves were modest and largely reactive to broader shifts in risk sentiment.

Near-Term GBP/AUD Forecast: All Eyes on Australian Inflation Data

Looking ahead, the next key driver for the Pound to Australian Dollar exchange rate will be Wednesday’s Australian CPI report.

Economists expect inflation to edge higher across key measures, which could bolster AUD if the data reduces the likelihood of further Reserve Bank of Australia (RBA) rate cuts.

Until then, GBP/AUD movement on Tuesday is likely to be shaped by global market tone.

If optimism surrounding trade relations persists, the Aussie may extend gains. Conversely, any cooling in sentiment could see Sterling claw back some ground.

The Pound to US Dollar (GBP/USD) exchange rate firmed at the start of the week as softer US inflation data fuelled expectations for aggressive Federal Reserve rate cuts and lifted risk sentiment.

DAILY RECAP:

The US Dollar (USD) lost traction on Monday as markets digested the implications of last Friday’s softer US CPI report.

Headline inflation eased more than expected, reinforcing the view that price pressures are cooling and boosting market confidence that the Federal Reserve could cut rates by up to 50 basis points before year-end.

This dovish shift in expectations weighed on USD across the board, with the currency also pressured by a broad risk-on tone after reports of progress in US-China trade talks.

Meanwhile, the Pound (GBP) traded in tight ranges, with little domestic data to provide direction.

Traders focused on the afternoon’s CBI distributive trades survey, expected to show another dip in retail sales activity — potentially signalling softer consumer demand.

Overall, Sterling’s performance on Monday reflected its rising sensitivity to shifts in global risk appetite rather than homegrown fundamentals.

Near-Term GBP/USD Forecast: Fed Decision Looms Large

All eyes now turn to Wednesday’s Federal Reserve policy meeting.

Markets widely expect a 25bps rate cut, though speculation has grown over a larger 50bps move following last week’s inflation data.

If the Fed delivers a bigger cut or signals further easing ahead, the Dollar could slide sharply.

Conversely, a cautious tone or smaller-than-expected move might prompt a USD rebound.

With the UK data calendar quiet, GBP/USD direction will hinge primarily on the Fed’s decision and the accompanying guidance.

Continued risk-on sentiment would also favour the Pound, while any souring in global mood could see Sterling retrace gains.

The US Dollar to Japanese Yen (USD/JPY) exchange rate is trading near ¥152.86, down 0.14% on the day after touching resistance around 153.27 last week.

Rabobank says the week ahead could be pivotal for the yen, with markets watching both the Bank of Japan’s October 30 policy meeting and Prime Minister Takaichi’s first in-person meeting with US President Trump.

“The market’s implied path for policy now suggests only 20 bps of tightening over three months,” Rabobank noted, “reflecting a loss of confidence in the BoJ’s ability to deliver another 25-bps hike before year-end.”

The bank highlighted that the yen has been the worst-performing G10 currency so far this month, losing over 3% against the US dollar.

“We see scope for the JPY to recover some ground versus the USD on the assumption that BoJ rates can be raised again by the turn of the year,” the bank said.

“This in turn assumes that Governor Ueda underscores the BoJ’s hawkish bias at this week’s policy meeting.”

Rabobank forecasts USD/JPY at 147 on a three-month view, adding that “recent highs around 153.27 are likely to provide resistance,” and that it would favour selling rallies ahead of the BoJ decision.

On the political front, the bank said Takaichi’s meeting with Trump “will be an early test of her ability to maintain Japan’s alliance with Washington” and that she is unlikely to advocate a weaker yen policy given the sensitivity of imported inflation.

Current USD/JPY rate: ¥152.86. More Dollar-Yen forecasts.

GBP/USD Technical Analysis

The British pound rallied a little bit during the trading session here on Monday as well, as it looks like the 1.34 level is coming into the picture for potential support and resistance as it is in the middle of the larger consolidation area. Rallies that appear here and show signs of exhaustion are more likely than not going to be sold into, with the 1.35 level being significant resistance as it is the same place that not only do we see a large, round, psychologically significant figure, but also where we start to run into the uptrend line that’s now been broken. If we drop from the 1.35 level, then we could head back to the 1.3250 level, possibly the 1.32 level.

EUR/GBP Technical Analysis

The Euro has pulled back slightly against the British pound during the trading session on Monday, with the 0.8750 level offering resistance yet again. At the end of the day, this is a market that I think continues to see the 0.8750 level as a major barrier. So, if we were to break above there, then we could go much higher. A short-term pullback to the 50-day EMA is possible, with the 0.8684 level offering a little bit of support. Anything below there, then we could go looking at the 0.86 level, where the 200-day EMA is trying to get to.

This is a positive market overall, but we have such a major amount of resistance above that it is going to be difficult to ultimately have to make some type of bigger decision. Keep in mind that this pair is typically very choppy. So, at the end of the day, this is a market that I think you use as an indicator of how to trade the euro or the pound against the US dollar based on relative strength.

For a look at all of today’s economic events, check out our economic calendar.

The Pound to Canadian Dollar exchange rate (GBP/CAD) softened last week as weaker UK inflation data and renewed fiscal concerns weighed on Sterling sentiment.

WEEKLY RECAP:

The Pound (GBP) was subdued early in the week amid light data and directionless trading.

Tuesday’s UK public finance figures revealed government borrowing had climbed to its highest level since 2020, fuelling fiscal unease ahead of the Autumn Budget.

Mid-week, Sterling came under renewed pressure as September’s CPI data undershot expectations — headline inflation held at 3.8% and core slipped to 3.5%.

The weaker figures amplified Bank of England (BoE) rate cut speculation, dragging GBP lower through Wednesday and Thursday.

By Friday, Sterling stabilised after upbeat retail sales and services PMI results signalled resilience in consumer and business activity, helping the Pound trim its losses into the weekend.

The Canadian Dollar (CAD) endured a choppy week, initially pressured by softer oil prices before recovering on Tuesday as domestic inflation surprised to the upside — tempering Bank of Canada (BoC) rate cut expectations.

Mid-week, rising oil prices provided further support, though Thursday’s weaker retail sales print and renewed trade tensions with the US capped gains, leaving CAD volatile into the week’s end.

Near-Term GBP/CAD Forecast: BoC Decision to Steer the Loonie

The key event this week will be Wednesday’s Bank of Canada (BoC) rate decision.

Markets expect a 25bps cut; if confirmed, and paired with dovish forward guidance, CAD could come under pressure mid-week.

However, if the BoC surprises with a hold or downplays further easing, the Canadian Dollar may rally.

The UK side remains light, with Monday’s CBI distributive trades survey expected to show another decline — a result that could see Sterling start the week on a softer footing.

Overall, GBP/CAD direction looks set to hinge on the BoC’s tone and subsequent market risk appetite.