With the market sentiment favouring riskier assets, the British Pound appears ready to give another step up. Nevertheless, the preliminary Q3 GDP for 2023, which is due later this week, may provide guidance for headwinds. Due to a weak demand environment, UK firms made significant staff and inventory cuts, which is why economists predict a slightly negative GDP in Q3.

Rather than any indication of strength in the local economy, the Euro strengthened versus the US dollar to levels last seen in September as a result of the Dollar’s recent decline. Even still, September saw a 0.2% increase in German industrial orders over the previous month—a better outcome than the 1% decline that was anticipated, but still a significant decline from the revised 1.9% gain that was recorded in August.

Because of Friday’s fewer-than-expected non-farm payrolls report and the Federal Reserve’s less hawkish signals, bets that the bank was done raising interest rates increased, and the U.S. dollar lingered around six-week lows. The possibility of no additional rate hikes is encouraging for international markets, but it also means that the central bank will likely maintain rates higher for longer, which will reduce the likelihood of any significant near-term gains in foreign currencies.

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