Market News

Sterling has strengthened against the euro as expectations of higher UK interest rates collide with growing uncertainty across European financial markets. On October 20, the pound reached its strongest level against the single currency since May 2025, with the exchange rate trading around 83.95 pence per euro (after a low at around 83.89). The currency was mostly supported by UK labour-market data that reinforced expectations of a Bank of England (BoE) rate increase on November 5.

EUR/GBP Daily Chart - Source: TradingView

However, the pound's advance is not simply a reflection of improving UK economic fundamentals. Political unrest in France, rising European sovereign borrowing costs…

Protests that began in France a few weeks ago over poor school conditions have escalated into clashes with police, looting, and arson amid rising fuel prices and the cost of living. 

The problem is that France’s budget deficit reached 5.1% of GDP in 2025, while public debt approached 120%, leaving the government with little room to support households. 

Actually, it is now pushing for €54 billion in spending cuts in its 2027 budget, as the fiscal outlook could otherwise deteriorate further, but getting them through amid social unrest won’t be easy. 

Demonstrations also took place in Liège, Belgium, in early October before spreading to other cities across…

• UK September CPI +3.5% vs +3.4% y/y expected
• Prior +3.1%
• UK September core CPI +2.8% vs +2.8% y/y expected
• Prior +2.6%

More to come...

This article was written by Justin Low at investinglive.com.

The UK CPI report for September is the main highlight on the economic calendar today, with the release due at 0600 GMT. The inflation numbers will be heavily watched as it will have a lot to say about what comes next on the BOE outlook, even if traders are almost fully pricing in another 25 bps move in November.

Here's what to expect from the report:

• Headline CPI: +3.4% y/y expected (Prior +3.1%)
• Core CPI: +2.8% y/y expected (Prior +2.6%)

The estimates show that another pickup in inflation pressures is expected this time around. That's hardly good news for the BOE with price pressures already running well above its 2% target.

Higher energy costs are expected to remain a key driver, but I would argue that the more important thing to watch today…

• Underlying inflation is quite close to BOJ's 2% target
• Expect underlying inflation to converge to levels consistent with BOJ's target
• Medium, long-term inflation expectations continue to heighten
• Financial conditions remain accommodative
• Real interest rates remain low
• Delay in adjusting policy could see inflation risks materialise, hurt the economy
• Upside risks to prices are high

The remarks from BOJ deputy governor, Ryozo Himino, above are not anything that we haven't heard of from the central bank. It mainly juts reinforces the narrative that Japan is getting closer to achieving its long-sought inflation target and that the central bank now has to be careful about letting things run too hot.

The most striking part of his comments is arguably…

• NEXTDC shares plunge 44% as power delays expose AI data centre bottleneck
• Nvidia in talks to invest hundreds of millions in Firmus after AI cloud firm’s IPO flop
• US intel says Putin ordered NATO sabotage drive, Leipzig drone attack an opening shot
• Japan’s Katayama sees no gap with BOJ, says wage-driven inflation is near
• PBOC sets USD/ CNY mid-point today at 6.7192 (vs. estimate at 6.6779)
• Japan exports rise 16.7% for 13th straight month on AI chip demand, trade gap narrows
• Citadel’s Griffin says AI “almost certainly” a bubble, even as demand signals stay strong
• SpaceX’s Musk says Tesla merger good idea but far from certain, needs 50% of Tesla shares
• UBS flags 3 tests for the AI trade as Meta kicks off mega-cap tech earnings
• Super Micro shares jump…

A fresh Nvidia investment would reassure holders of neocloud debt and equity that the sector’s largest supplier remains willing to support it, even as public markets turn more selective. The flip side is that Nvidia backing companies that buy its chips may sharpen questions about how much AI infrastructure demand depends on vendor financing rather than independent capital, an issue that sits at the heart of the bubble debate Ken Griffin revived on Tuesday. For Nvidia shares, the amounts involved are small, so the signal matters more than the money. The episode also suggests the IPO window for AI infrastructure firms is narrowing, pushing more of them toward private and strategic funding.

-

When public investors walked away from Firmus,…

NEXTDC’s downgrade is a stark example of a risk investors have tended to treat as theoretical: that grid access and local opposition, not customer demand, cap how fast data centre capacity can be built. The read-through extends well beyond Australia, as operators and AI cloud providers globally depend on utilities and planning authorities that move more slowly than hyperscaler spending plans. It echoes the warning in Anthropic’s draft IPO prospectus, reported this week, that resistance to data centres is becoming more organised across jurisdictions. Investors may now apply a larger discount to contracted-but-undelivered capacity across the sector, particularly where projects depend on new grid connections.

-

NEXTDC had the customers and the…

The PBOC allows the yuan to fluctuate within a +/- 2% range, around this reference rate. More here on this.

• PBOC injects 80 billion yuan through overnight reverse repos
• Zero 7 day reverse reopos today
• 56bn oz 7 day RRs mature today

This article was written by Eamonn Sheridan at investinglive.com.

The report raises the perceived risk of escalation between Russia and NATO, which would tend to support European defence stocks and weigh on European risk sentiment if officials respond with tougher measures. The energy channel is the one to watch: Russia’s diesel supply deal with Washington and the pause in new US sanctions were aimed partly at keeping Moscow out of the war with Iran, so any rupture in that arrangement could tighten fuel markets already strained by the Middle East conflict. Drone strikes on commercial ships in the Black Sea add a shipping risk premium near NATO waters. For now, the report adds detail and attribution rather than a new event, so the market impact may be limited unless governments act on it.

-

The Leipzig…

A bubble call from one of the most closely watched figures in finance is likely to sharpen the debate over AI valuations, though Griffin’s framing stops well short of a call to exit. His argument that transformative shifts usually come with a bubble implies volatility and losers along the way, not a collapse in the underlying trend, which may limit any direct market reaction. The timing is notable: his comments arrived alongside SpaceX’s AI revenue beat, Super Micro’s surprise upgrade and Musk’s claim that compute remains scarce, so investors are weighing strong near-term demand against concerns about how much of it is already priced in. That tension may feed the stock-specific volatility analysts expect this earnings season.

Griffin…

The fixing mechanism matters most right now because its message has shifted over the past month. For nearly a year, the PBOC has set its daily guidance weaker than market expectations, which traders read as an effort to slow the yuan's appreciation, and in late August that gap reached its widest since February, shortly after the yuan touched a three-and-a-half-year high. Through October, however, the midpoint has strengthened at a faster pace, narrowing its gap with market expectations and suggesting the central bank has eased its resistance to yuan gains. The fixing is still set weaker than models imply, so this looks like a loosening of the brakes rather than their removal. The balance Beijing is weighing is unchanged: a firmer currency…