Economic Situation
The pound sterling dominated the week. By Friday, October 30, it had regained its strongest level against the euro since spring 2025: one euro was worth 0.83380 pounds, down 0.42% over the past seven days. The Swiss franc and the Canadian dollar also advanced against the euro, with the dollar less so.
Energy price pressures are fueling inflation on both sides of the Channel, but the Bank of England and the European Central Bank are not reacting at the same pace. Among 63 economists surveyed by Reuters in mid-October, 54 expect the BoE to raise its main rate to 4% next Thursday, from 3.75% today.
UK prices rose by 3.5% year-on-year in September, higher than anticipated. The October 28 budget, meanwhile, kept to the deficit-reduction path without increasing the cost of debt.
The yield gap does the rest: the British rate leads the ECB’s by 1.25 percentage points, and on Thursday it could widen to 1.5 points. Higher yields on pound-denominated investments attract capital ahead of the decision. The European institution, for its part, kept deposit remuneration at 2.5% on October 29, even though prices had risen 3.8% in September: once inflation is stripped out, an investment in euros loses value.
In our view, this yield differential explains the underlying trend of the pound. A British programme funded in pounds will therefore not become more affordable this winter, and the margin will narrow on deals already confirmed.
Energy price pressures are fueling inflation on both sides of the Channel, but the Bank of England and the European Central Bank are not reacting at the same pace. Among 63 economists surveyed by Reuters in mid-October, 54 expect the BoE to raise its main rate to 4% next Thursday, from 3.75% today.
UK prices rose by 3.5% year-on-year in September, higher than anticipated. The October 28 budget, meanwhile, kept to the deficit-reduction path without increasing the cost of debt.
The yield gap does the rest: the British rate leads the ECB’s by 1.25 percentage points, and on Thursday it could widen to 1.5 points. Higher yields on pound-denominated investments attract capital ahead of the decision. The European institution, for its part, kept deposit remuneration at 2.5% on October 29, even though prices had risen 3.8% in September: once inflation is stripped out, an investment in euros loses value.
In our view, this yield differential explains the underlying trend of the pound. A British programme funded in pounds will therefore not become more affordable this winter, and the margin will narrow on deals already confirmed.
Exchange Rates: The Technical Brief
The Thursday rate increase is already almost fully priced in.What will move the pound is the guidance the Bank of England will give for the future. If its message opens the door to further hikes, those who bet against the pound, at 79,414 contracts as of October 27, would have to buy back: the euro would then fall toward 0.8270 pounds.
Presented as the last one, it would disappoint instead, and the pair would rise toward 0.8370. Elsewhere, the European currency has lost 0.19% against the dollar over seven days, to 1.1172, before settling around 1.1180 on Monday morning. A weak US payrolls figure on Friday would bring it closer to 1.1300 dollars; a strong number would push it back toward 1.1080.
On the yen side, bets and prices diverge: bets on a firmer Japanese currency reached 101,591 contracts, and yet the yen has fallen to 176.50 yen per euro on Monday. If the Bank of Japan governor speaks cautiously, the pair would move toward 178.50. Japan thus remains not affordable, and it is prudent to stagger yen purchases.
Morocco, opening its winter season, is edging higher discreetly. Bank Al-Maghrib’s reference rate on October 30 set the euro at 10.9836 dirhams, versus 11.217 at the start of the month, i.e., about 2% cheaper.
The dirham’s value is fixed on a basket composed of 60% euros and 40% dollars: when the euro weakens against the dollar, the dirham strengthens mechanically against the euro. A trip to Marrakech or a stay in Agadir charged in dirhams thus costs a little more than a month ago.
| WEEKLY SUPPORTS | WEEKLY RESISTANCES | |||
| S2 | S1 | R1 | R2 | |
| EUR/USD | 1.1080 | 1.1120 | 1.1220 | 1.1300 |
| EUR/GBP | 0.8270 | 0.8310 | 0.8370 | 0.8420 |
| EUR/CHF | 0.9120 | 0.9160 | 0.9230 | 0.9270 |
| EUR/CAD | 1.5450 | 1.5530 | 1.5680 | 1.5760 |
| EUR/JPY | 174.50 | 175.50 | 177.40 | 178.50 |
The supports and resistances shown below indicate respectively the lower and upper points within which prices are expected to move over the course of the week.
The information presented in this publication is provided for strictly informational purposes and does not constitute investment advice, nor a sales offer, nor a solicitation to purchase, and should in no way be used as a basis or taken as an incentive to engage in any investment.
Mondial Change is a French financial institution founded in 2015, specializing in the management of international payments and exchange-rate risk.
Mondial Change also supports numerous players in tourism, travel agencies, group organizers, tour operators, inbound operators…
www.mondialchange.com
Contact: [email protected]
Mondial Change also supports numerous players in tourism, travel agencies, group organizers, tour operators, inbound operators…
www.mondialchange.com
Contact: [email protected]
