News
Friday, October 16, 2026
What’s happening: The British pound edged higher versus the US dollar this morning after rising sharply in the previous session.
What happened: The sterling moved sharply higher on Thursday amid weakness in the US dollar due to a decline in Treasury yields and debt concerns around AI companies.
Stronger-than-expected GDP data from the UK provided a further boost to the GBP/USD forex pair.
Why it matters: Data released from the Office for National Statistics on Thursday showed that UK’s economy expanded more than expected in August, reinforcing prospects of the Bank of England hiking interest rates next month.
UK’s GDP grew by 0.1% in August, decelerating from the previous month’s 0.4% growth. However, the figure topped market estimates of a contraction. Industrial production also surged 0.8% in August, accelerating from July’s 0.3% growth and beating market estimates of a 0.1% decline.
UK’s trade deficit shrank to £0.92 billion in August from £2.32 billion in the previous month. This marked the smallest trade deficit since January.
The data comes before the release of UK’s budget later this month, which would be the first budget for Finance Minister John Healey.
Healey said that the government’s budget will act as a buffer against energy-driven economic instability caused by the ongoing war in Iran. He further assured that the budget would strictly adhere to the government’s fiscal rules.
The Bank of England has kept its benchmark interest rates unchanged this year, while other major central banks including the European Central Bank and Federal Reserve have announced rate hikes. Against this backdrop, investors continue to widely expect the BoE to deliver at least one 25-bps rate hike by the end of the year.
The US dollar index surged to a fresh 2026 high on Wednesday following the release of hotter-than-expected inflation data. However, the index pared gains amid lower US Treasury yields and other economic reports released on Thursday.
Weakness in the US dollar lent further support to the GBP/USD forex pair. The US dollar index, which measures the greenback’s performance versus a basket of major peers, edged lower to 102.04 this morning.
The GBP/USD forex pair rose to 1.3279 this morning, extending gains recorded in the previous session.
What to watch: Investors will keep an eye on the developments related to the US-Iran conflict.
UK’s jobs report will be released on Tuesday next week. The unemployment rate in the country, which came in unchanged for the fourth straight period at 4.9% in the three months to July, is expected to remain unchanged in August. The number of employed people in the UK, which climbed by 67,000 to 34.478 million in the three months in July, is expected to rise by 80,000 in August. Total average weekly earnings, including bonuses, which surged 3.9% year-over-year to £756 in the three months to July, are expected to rise by 3.8% in August.
Context: Equity markets in the US closed mostly higher on Thursday, with the Dow Jones index surging more than 550 points.
Details: Data released on Thursday showed US producer prices surging by the most in four-and-a-half years in September amid higher costs of goods and services. Producer prices jumped 1.3% from the previous month, coming in sharply above market estimates of 0.5%.
Retail sales grew 0.8% in September, decelerating from August’s 1.3% growth but topping market expectations of 0.3%. Initial jobless claims surged by 1,000 to 199,000 in the week ending October 10. The figure came in better than market expectations of 200,000.
Higher-than-expected consumer inflation data, released on Wednesday, raised speculations of further interest rate hikes by the US Federal Reserve.
Eight of the 11 sectors on the S&P 500 recorded gains on Thursday, with healthcare and materials among the top performers. Energy, information technology and utilities stocks bucked the trend, ending the trading day in the red.
Shares of healthcare companies, including, Eli Lilly and UnitedHealth, recorded gains, while tech majors Nvidia, Dell Technologies and Hewlett Packard Enterprise settled lower on Thursday.
The yield on 10-year Treasuries moved lower, but remained close to multiyear highs amid inflationary concerns due to higher crude oil prices.
The Dow Jones index jumped 556.21 points, or 1.08%, to close at 52,177.69, while the S&P 500 rose 0.33% to settle at 7,744.06. The Nasdaq 100 slipped 0.05% to close at 29,935.59 on Thursday.
What to watch: Data on export prices (1630 UAE Time), import prices (1630 UAE Time) and industrial production (1715 UAE Time) will be released by the US today. US export prices, which rose 0.6% in August, are expected to surge by 1% in September. Analysts expect prices of imports into the US to surge by 0.8% in September following a 0.7% gain in August.
Industrial production in the US, which came in unchanged in August after rising 0.2% in July, is expected to grow 0.4% in September.
Other Markets: European indices closed higher on Thursday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 1.08%, 0.33%, 0.78% and 0.38%, respectively.
Russia accused Ukraine of attacking an oil refinery on Thursday, despite the US-brokered energy ceasefire. The news sent the USD/RUB forex pair higher in forex trading this morning.
New Zealand’s BusinessNZ performance of manufacturing index jumped to 56.5 in September from 53.2 in the previous month. The latest reading signalling stronger growth in manufacturing activity lent support to the NZD/USD forex pair.
Canada’s wholesale sales contracted by 1.6% to C$91.6 billion in August, worse than market estimates of a 1.5% decline. This being the first decline since January sent the USD/CAD pair higher in forex trading this morning.
India’s unemployment rate came in unchanged from August’s five-month low of 5.0% in September. The figure coming in better than market estimates of 5.2% exerted pressure on the USD/INR forex pair.
Singapore’s non-oil domestic exports jumped 68.4% year-over-year in September, accelerating from 46.1% in August. However, the USD/SGD pair rose in forex trading this morning.