Monday Morning Currency Market Report — 26 October 2026

26 October 2026 — The week ahead in foreign exchange markets.

The final week of October brings a significant concentration of central bank decisions, inflation data and economic growth figures. With the Federal Reserve, Bank of Canada, European Central Bank, Bank of Japan and Reserve Bank of New Zealand all in focus, currency markets could see increased volatility as investors reassess interest-rate expectations.

For businesses and individuals transferring money internationally, this is a week when the timing of a transaction could make a meaningful difference to the amount ultimately received.

Market overview: Monday morning

Global currency markets have started the week relatively calmly, with investors positioning themselves ahead of Wednesday and Thursday's major events.

Recent trading has seen the US dollar ease slightly as US Treasury yields declined and oil prices softened. The euro and sterling edged higher against the dollar, while the Japanese yen remained under pressure.

Indicative market levels reported on Monday morning were:

EUR/USD: around 1.1220

GBP/USD: around 1.3385

USD/JPY: around 156.92

US Dollar Index: around 101.64

These are reported market levels, not live executable exchange rates. Rates can change quickly, particularly around economic announcements. Source: Reuters, 26 October 2026.

Oil also remains an important variable. Brent crude has been trading at elevated levels, around $115 a barrel, meaning developments in energy markets and geopolitical tensions could feed into inflation expectations, central bank decisions and currencies.

The key question this week is whether central banks signal that interest rates need to remain higher for longer, or whether weakening economic conditions could eventually justify a more accommodative approach.

The key events to watch this week

Monday 26 October — Eurozone business confidence

Key release: German Ifo Business Climate Index

Germany's Ifo survey provides an insight into how businesses view current conditions and their expectations for the months ahead.

Germany remains the largest economy in the eurozone, so a stronger-than-expected reading could support the euro by suggesting that business activity is stabilising.

A weaker result could reinforce concerns about European growth, particularly if businesses report subdued demand or worsening expectations.

Currencies to watch: EUR/USD, EUR/GBP and EUR/JPY.

The immediate reaction will depend on the published result compared with market expectations, rather than the headline number alone.

Tuesday 27 October — US demand and consumer confidence

Tuesday brings several indicators that will help investors assess the resilience of the US economy ahead of the Federal Reserve decision.

US durable goods orders

These figures measure demand for manufactured goods expected to last at least three years. They provide clues about business investment, manufacturing activity and confidence.

A stronger reading could support the dollar if it reinforces expectations of resilient US growth.

A weaker reading could put pressure on the dollar if investors begin to anticipate slower economic activity.

The headline figure can be volatile because of large aircraft and transport orders, so the underlying measure excluding transportation will also matter.

US consumer confidence

Consumer spending is a major driver of the US economy. If confidence falls sharply, investors may question whether households will continue supporting growth at the current pace.

Stronger confidence could help the dollar; weaker confidence could have the opposite effect, particularly if accompanied by softer employment expectations.

US new home sales

Housing activity is sensitive to borrowing costs. Sales figures will offer another indication of how higher financing costs are affecting demand.

The eurozone bank lending survey is also worth watching for signs of tightening credit conditions, which could influence expectations for European economic activity.

Currencies to watch: USD, EUR and GBP.

Wednesday 28 October — The week's first major policy test

Wednesday is one of the most important days of the week, with inflation data, a New Zealand rate decision, the Bank of Canada decision and the Federal Reserve announcement.

Australian inflation

Australian consumer price data will be closely watched because inflation has been a concern for policymakers.

A stronger reading could increase expectations that Australian interest rates will need to remain restrictive or rise further, potentially supporting the Australian dollar.

A softer result could reduce those expectations and weigh on AUD, although the reaction will depend on the underlying inflation measures and the Reserve Bank of Australia's outlook.

Reserve Bank of New Zealand (RBNZ)

The RBNZ's decision and accompanying guidance will be important for the New Zealand dollar.

Investors will assess whether the central bank believes inflation remains sufficiently persistent to warrant tighter policy, or whether economic weakness argues for a more cautious approach.

The statement may matter as much as the rate decision itself.

Bank of Canada (BoC)

Markets are watching for a possible 0.25 percentage-point increase in the Canadian policy rate, from 2.25% to 2.50%, although the decision is not guaranteed.

A rate increase accompanied by hawkish guidance could support CAD. However, if the decision is already priced into the market, the Canadian dollar may react more to the Bank's comments on future policy and economic growth.

A hold, or a more cautious outlook than expected, could put the currency under pressure.

Oil prices will also remain relevant to the Canadian dollar, given Canada's position as a major energy exporter.

Federal Reserve (Fed)

The Federal Reserve is the week's central event for global currency markets.

Markets broadly expect the Fed to leave interest rates unchanged, following the September increase. However, investors will focus on whether policymakers signal further tightening ahead or indicate that the current policy stance is sufficient.

A more hawkish message could support the US dollar through higher expected US yields. A more dovish message could weaken it, particularly if investors begin to anticipate lower rates in the months ahead.

Why this matters: The dollar influences a large proportion of international trade, commodity pricing and cross-border payments. A substantial move in USD can affect businesses paying suppliers, receiving overseas revenue or converting funds between currencies.

Thursday 29 October — US growth, inflation and the ECB

Thursday could be another particularly volatile session, with major US economic figures followed by the European Central Bank's policy decision.

US third-quarter GDP

The preliminary estimate of US gross domestic product will provide a broad assessment of economic growth during the third quarter.

A stronger result could reinforce the view that the US economy remains resilient and give the Fed more room to maintain restrictive policy.

A weaker result could raise concerns about slowing growth, particularly if consumer spending and business investment also show signs of moderation.

The market reaction will depend on the composition of growth, not just the headline figure.

US PCE inflation

The Personal Consumption Expenditures price index is the Federal Reserve's preferred inflation measure.

Investors will pay particular attention to core PCE, which excludes food and energy, because it helps reveal underlying inflation pressures.

Hotter-than-expected inflation: could strengthen expectations of tighter monetary policy and support the dollar.

Cooler-than-expected inflation: could encourage expectations of less restrictive policy and weigh on the dollar.

Mixed figures: could produce a less predictable response, especially if growth and inflation point in different directions.

GDP and PCE are due together, so conflicting signals could increase short-term volatility.

European Central Bank (ECB)

The ECB's decision and press conference will be crucial for the euro.

Investors will assess the balance between inflation risks and the eurozone's economic outlook, including whether policymakers believe current interest rates are appropriate.

A more hawkish message could support the euro. A more dovish stance, particularly if accompanied by concerns about weak growth or credit conditions, could weigh on the currency.

French borrowing-cost pressures and broader fiscal concerns will also be relevant to investor sentiment towards the eurozone.

Currencies to watch: USD, EUR and GBP.

Friday 30 October — Japan, European growth and Canadian GDP

Friday brings another important set of releases as investors assess the outlook for Japan, Europe and Canada.

Bank of Japan (BoJ)

The Bank of Japan's decision and outlook will be closely watched for signs of further monetary tightening.

The yen has remained weak against the dollar, and investors will be looking for clues about the timing and likelihood of future rate increases.

A more hawkish message could support JPY. A cautious approach could leave the yen vulnerable, particularly if the interest-rate gap between Japan and the US remains wide.

Tokyo inflation figures will provide an additional indication of underlying Japanese price pressures.

Eurozone third-quarter GDP

The preliminary GDP estimate will provide an important snapshot of economic momentum across the single-currency bloc.

Stronger growth could support the euro by reducing concerns about stagnation. A disappointing result could reinforce expectations of weaker activity and place pressure on EUR.

German inflation

Germany's inflation figures will also be important for the euro, particularly if the numbers differ significantly from expectations.

Higher inflation could complicate the ECB's policy outlook, while softer inflation could strengthen the case for a less restrictive approach.

Canadian GDP

Canada's August GDP release will provide another assessment of economic momentum following the Bank of Canada's decision earlier in the week.

Stronger growth could support CAD if it reinforces expectations of resilient demand. A weaker result could offset any support the currency receives from a hawkish central bank.

US Employment Cost Index

Labour costs remain an important inflation indicator. Stronger employment cost growth could suggest persistent domestic inflation pressures, while softer figures could support the argument that wage-related inflation is easing.

Currencies to watch: JPY, EUR, CAD and USD.

What could this mean for sterling?

Sterling will not be driven solely by UK data this week. Its performance against the dollar and euro may depend heavily on developments in the US and eurozone.

GBP/USD could benefit if the dollar weakens following softer US growth or inflation figures. Conversely, stronger US data or a hawkish Fed could put pressure on sterling against the dollar.

EUR/GBP will be influenced by relative expectations for UK and eurozone interest rates, as well as the outlook for economic growth on both sides of the Channel.

Businesses with upcoming sterling conversions should therefore consider both sides of their currency exposure rather than focusing exclusively on UK headlines.

The wider factors to keep on the radar

Geopolitics and energy prices: Developments involving Iran and the wider region could affect oil prices, inflation expectations and demand for traditional safe-haven currencies.

China's economic outlook: The Communist Party's Fifth Plenum runs from 26 to 29 October. Investors will be looking for policy signals and evidence of support for growth. Any implications for Chinese demand could affect commodity-linked currencies, particularly AUD.

Interest-rate expectations: Markets respond to changes in expectations, not simply to whether a central bank raises, cuts or holds rates. A decision that is fully anticipated may have limited impact unless the accompanying statement surprises investors.

Market positioning: When many investors already expect the same outcome, even a small surprise can trigger a disproportionate move as positions are adjusted.

What should international businesses do this week?

For companies making international payments, the practical issue is how currency volatility affects costs, margins and cash flow.

A movement of just 1% can make a meaningful difference on a large transaction. For example, a £500,000 equivalent currency requirement would represent a £5,000 difference in value for a 1% move, before allowing for spreads, fees and other pricing factors.

Businesses should consider:

Reviewing upcoming supplier payments and expected overseas receipts.

Checking whether currency exposure is concentrated around major announcements.

Comparing the full cost of conversion, including exchange-rate margins and transfer charges.

Discussing spot transactions, forward contracts or limit orders with an appropriately authorised provider where suitable.

Avoiding decisions based solely on predictions about where the market will move next.

No market forecast can guarantee the direction of an exchange rate. A clear payment strategy can, however, help businesses manage uncertainty more effectively.

Pure Currencies: Making international payments work harder

At Pure Currencies, we help individuals and businesses manage international transfers with a more personal, relationship-led service.

Through our payment partners, clients can access competitive exchange rates, international payment solutions and support from a dedicated account manager, with potential savings compared with traditional bank pricing.

Whether you are paying overseas suppliers, purchasing property, relocating or managing international business revenue, understanding the market is the first step towards making more informed currency decisions.

Planning an international transfer? Contact Pure Currencies to discuss your requirements before your next conversion.

Website: www.pure-currencies.com

Dubai: +971 55 228 3090 | UK: +44 1494 414 520

Email: support@pure-currencies.com

Market information is provided for general information only and is not investment advice or a prediction of future exchange rates. Economic calendars and release times can change. Currency prices are subject to market movements, and any savings depend on the transaction, provider pricing and prevailing market conditions.