The main event for this week was the announcement of Rishi Sunak as the new UK Prime Minister. The first billionaire to live at Number 10 Downing Street and the youngest UK Prime Minister in 200 years hopefully marks an end to the UK’s recent political turmoil. Although significant challenges remain for the UK, the GBP found some relief with the ex-Chancellor now at the helm. In other news, the ECB and the BoC both took a more dovish stance on their meetings increasing expectations for a more dovish response from the Fed next week.

Other key events from the past week

• GBP: Rishi’s recovery, Oct 25: The appointment of Rishi Sunak as the UK PM reassured markets this week and helped the GBP recover some of its more recent losses.
• CAD: Dovish BoC, Oct 26: The BoC delivered a more dovish message, on balance, choosing to only hike by 50bps. Governor Macklem said that he expects Canadian growth to stall in the next few quarters and that could weaken the CAD from here if the BoC follows through on a slower path of rate hikes.
• EUR: Hikes by 75bps, Oct 27: The ECB hiked by 75bps as expected and also changed the interest rates applicable to TLTRO III. However, STIR markets now expect a lower interest rate of 2.78% maximum next year taking the meeting as dovish.

Key events for the coming week

• AUD: RBA rate decision, Nov 01: Short-term interest rate markets price in a 93% chance of a 25 bps rate hike from the RBA next week. Will the RBA continue to signal a slowing down of rate hikes? More AUDNZD falls to come?
• Strong seasonal approach for the FTSE 100: Can the FTSE100 finally put in some gains on a new UK PM? 
• USD: Interest Rate decision, Nov 02: The Federal Reserve meets next week and short-term interest rate markets are pricing in over 90% chance of a 75bps hike. However, there have been hints that the Fed may signal a pause as big-name US tech stocks like Tesla, Alphabet, Microsoft, and Meta miss earnings. 

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