Oil Rebounds Amid Iran Tensions as Dollar Holds Firm, Ramsden in Focus

Oil prices moved higher at the start of the week as renewed uncertainty around US-Iran diplomacy kept Middle East supply risks in focus. Brent crude rebounded following developments over the weekend, reversing part of the decline seen earlier last week and keeping energy prices in focus for global markets.

Higher oil prices have also kept inflation and interest-rate expectations in focus, particularly as central banks continue to assess the effect of higher energy costs on price pressures. The US dollar remained firm near recent highs during early Monday trading, while sterling and the euro both traded slightly lower against the greenback.

Attention in the UK now turns to Bank of England (BoE) Deputy Governor Dave Ramsden, who is due to speak later today. His speech is expected to focus on quantitative tightening, while markets may also assess any broader comments on the UK economic and monetary-policy outlook at a time when energy prices remain an important consideration for monetary policy. Market participants may also assess whether any broader monetary-policy comments affect UK rate expectations, which may in turn influence sterling trading.

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GBP: Sterling Holds Near Recent Lows Ahead of Ramsden Speech

GBP/USD: 1.3250 | EUR/GBP: 0.8585

GBP/USD is trading around 1.3250 at the start of the week, keeping sterling close to the lower end of its recent range. EUR/GBP is holding near 0.8600, with the pound showing limited recovery as market participants continue to assess the UK interest-rate outlook.

Higher energy prices may add to UK inflation pressures if sustained, including through imported energy costs. A sustained increase in energy prices could add to inflation pressures and may influence the BoE’s assessment of the appropriate stance of monetary policy.

Attention now turns to BoE’s Deputy Governor Dave Ramsden, who is due to speak later today. Markets may also assess any broader comments on inflation risks, the economic outlook and monetary policy. Ramsden’s speech is among the domestic events being monitored by currency markets during Monday’s session.

EUR/GBP remains close to 0.8600, with sterling showing limited movement against the euro.

Key technical reference levels for GBP/USD: resistance sits near 1.3275, followed by 1.3300, while support sits around 1.3200, followed by 1.3150.

Key technical reference levels for EUR/GBP: resistance sits near 0.8612, followed by 0.8640, while support sits around 0.8590, followed by 0.8578.

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EUR: Euro Softens as German Consumer Confidence Weakens

EUR/USD: 1.1379

EUR/USD is trading around 1.1379 at the start of the week, with the euro remaining close to recent lows against the US dollar. The pair remains near recent lows alongside higher oil prices and a relatively firm US dollar.

German consumer confidence weakened more sharply than expected, with the NIM Consumer Climate powered by GfK indicator falling to -30.6 from a revised -26.8, compared with expectations of -27.4. Income expectations declined particularly sharply as households became more concerned that elevated energy costs could reduce purchasing power.

The weaker consumer reading highlights continued pressure on German households, while higher energy prices may add to household costs. At the same time, higher oil prices may remain one factor in the European Central Bank’s (ECB) assessment of inflation risks, leaving the policy outlook sensitive to the balance between softer demand and persistent price pressures.

EUR/USD remains influenced by the domestic economic backdrop, the US dollar and broader inflation expectations.

Key technical reference levels for EUR/USD: resistance sits near 1.1400, followed by 1.1450, while support sits around 1.1350, followed by 1.1325.

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USD: Dollar Holds Firm as US Data Sends Mixed Signals

DXY: 101.10

The Dollar Index (DXY) is trading around 101.10 at the start of the week, holding close to its recent two-month highs. The dollar remains near recent highs as market participants assess the possibility of further Federal Reserve (Fed) tightening alongside inflation risks associated with higher energy prices.

Friday’s durable-goods data presented a mixed picture. Headline orders were unchanged in August, compared with expectations for a 0.4% decline, while orders excluding transportation increased 0.3%, below the 0.6% forecast. However, non-defence capital goods orders excluding aircraft rose 1.6%, well above expectations of 0.5%, with the measure commonly used as a proxy for business investment showing a stronger-than-expected increase.

Consumer sentiment remained weak. The final Michigan Consumer Sentiment Index came in at 48.1, down from 51.7 in August, while one-year inflation expectations stood at 4.6% and five-year expectations at 3.4%. The figures present a mixed domestic backdrop of weaker consumer confidence and elevated inflation expectations.

Attention now turns to today’s Dallas Fed Manufacturing Business Index, before a heavier run of US inflation and labour-market data later in the week.

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Other Currencies: Aussie Awaits RBA as BoJ Minutes Weigh on Yen

AUD/USD: 0.7010 | NZD/USD: 0.5665 | USD/JPY: 157.75 | GBP/JPY: 209.00

AUD/USD is trading around 0.7010, close to its lowest level since early August, as attention turns to Tuesday’s Reserve Bank of Australia (RBA) policy decision. Economists widely expect the RBA to raise the cash rate by 25 basis points to 4.60%, with persistent inflation pressures and elevated energy prices remaining central to the policy outlook. The Australian dollar remains near recent lows alongside relatively firm US-dollar trading.

USD/JPY has moved towards 157.75 following the release of the Bank of Japan’s (BoJ) July meeting minutes. Policymakers agreed that financial conditions remained accommodative, while several members highlighted rising import costs and the continued pass-through of higher raw-material prices. Medium- and long-term inflation expectations were also seen rising, with market participants continuing to assess the outlook for future BoJ policy changes.

NZD/USD has recovered towards 0.5665 after the US and China agreed to extend their trade truce to 10 January 2027 while continuing discussions through existing bilateral mechanisms. The New Zealand dollar also moved higher as markets assessed the latest US-China trade developments, although the pair remains near recent lows.

GBP/JPY is trading around 209.00, with the cross remaining elevated amid movements in both sterling and the yen.

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Current Rate Table

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Market Lookahead

Monday, Sep 28

• BoE Deputy Governor Ramsden Speech

Tuesday, Sep 29

• Spain HICP (Sep)

Wednesday, Sep 30

• UK GDP (Q2, Final)
• US PCE Price Index & Core PCE Price Index (Aug)

Thursday, Oct 01

• Eurozone HICP & Core HICP (Sep)
• US ISM Manufacturing PMI (Sep)

Friday, Oct 02

• US Nonfarm Payrolls (Sep)
• US Average Hourly Earnings (Sep)
• US Unemployment Rate (Sep)

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