Sterling came under pressure last week as Gilt yields hit their highest since 2008, reviving concerns over the UK’s shrinking fiscal headroom ahead of the October 28th budget. The euro, meanwhile, looks set for a widely expected ECB rate hike this week, with markets fixated on whether Lagarde signals more to come, while the dollar’s rebound from Fed chair Warsh’s hawkish Jackson Hole speech has stalled despite a blowout Non-Farm payrolls report. Read on for this week’s main talking points.
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Today’s FX rates: 7 September 2026
| Currency pair | Rate |
|---|---|
| gbp usd | 1.3520 |
| eur usd | 1.1618 |
| gbp eur | 1.1637 |
Rates correct as of 1:00pm on Monday 7 September but may now have changed.
The Big 3
A deeper look at the performance of major currency pairs this week.
Sterling wobbles on fiscal jitters as dollar gains on hawkish Fed bets
GBP/USD retraced from the 1.3652 resistance level as sterling came under pressure from Gilt yields near 5.3%, the highest since 2008, reflecting market concern over the UK’s shrinking fiscal headroom ahead of the October 28th budget. The dollar found support after Fed chair Warsh’s hawkish Jackson Hole speech lifted September rate hike odds from 35% to 60%, though gains stalled following last week’s strong Non-Farm payrolls. With Chancellor Healey speaking today and PPI, CPI and UK GDP data due this week, the next leg for both currencies hinges on whether inflation prints validate the Fed’s hawkish repricing.
Euro braces for ECB hike as Lagarde’s rhetoric takes centre stage
EUR/USD held a tight range as eurozone inflation stuck at 3.3% cements expectations of an ECB rate hike this week, though the move itself is unlikely to drive the euro. The real catalyst is Lagarde’s rhetoric: whether policymakers frame it as a one-off insurance hike against the energy shock or the start of a longer tightening cycle. Meanwhile, the dollar’s rebound from Fed chair Warsh’s hawkish Jackson Hole speech has stalled despite last week’s blowout Non-Farm payrolls, leaving this week’s US PPI and CPI data as the key swing factor for whether the Fed follows through on a September hike.
Sterling treads water as fiscal jitters offset a ‘done deal’ ECB hike
GBP/EUR stayed rangebound with a downside bias as sterling’s fiscal jitters offset a widely expected ECB move. Gilt yields at their highest since 2008 have reignited concerns over the UK’s shrinking fiscal headroom ahead of the October 28th budget, with markets watching today’s speech from Chancellor Healey for signs of how spending will be funded. Meanwhile, eurozone inflation at 3.3% has all but locked in an ECB hike this week, though the decision itself won’t move the euro much — the real driver is whether Lagarde’s rhetoric signals more hikes to come or frames this as a one-off response to the energy shock.
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Looking forward
Key dates for your calendar.
- Monday: 🇺🇸 US Bank Holiday
- Tuesday: 🇬🇧 UK BRC Retail Sales Monitor
- Wednesday: 🇪🇺 ECB President Lagarde Speaks, 🇺🇸 US ADP Employment Change
- Thursday: 🇪🇺 ECB Interest Rate Decision, 🇺🇸 US PPI (Inflation)
- Friday: 🇬🇧 UK GDP m/m, 🇺🇸 US CPI (Inflation)
What we’re talking to our clients about
Clients can always reach out to us on the phone. Here are some of the conversations we’re having:
- UK fiscal headroom and what it means for Gilt-linked sterling exposure
- Whether the ECB hike is a one-and-done or the start of a cycle
- Timing FX conversions around this week’s US inflation data
The contents of this article do not constitute financial advice and are provided for general information purposes only. While the content is based on information believed to be accurate at the time of publication, no guarantee is provided.
