Sterling rises 0.35% to $1.3352 ahead of UK inflation data
Key Facts
Sterling rose 0.35% to $1.3352 during trading on Tuesday, 20 October 2026, according to Investing.com coverage, ahead of the release of UK inflation data for September. The currency gained on the day Britain's unemployment figures were published and ahead of scheduled fiscal and monetary policy events in October and November. During the previous Friday's trading, sterling had been heading for a weekly gain of nearly 0.7% against the dollar, according to separate coverage by the website. That trajectory had put the currency on course to end a 7-week losing streak, with trading still underway at the time. Tuesday's gains followed that recovery attempt, coinciding with the release of UK labour market indicators and ahead of events including inflation, the budget and the interest rate decision.
Britain's Office for National Statistics said the unemployment rate stood at 4.7% in the June to August 2026 period, in figures published on Tuesday. The rate fell by 0.1 percentage point compared with the same period a year earlier, according to the October labour market bulletin. It also declined by the same amount from the previous quarter, marking falls in both the annual and quarterly comparisons cited by the office in its bulletin. In its employment breakdown, the office attributed some small businesses' continued reluctance to hire workers to higher labour costs, saying this reflected "increases in labour costs". The decline in unemployment over the period covered by the figures thus coincided with continued hiring cost pressures at these businesses, according to the office's description of the labour market.
Against the monetary policy backdrop, Office for National Statistics data showed annual consumer price inflation rose to 3.1% in August 2026. The previous reading stood at 2.9% in July, before consumer price growth accelerated the following month. The Bank of England held its interest rate at 3.75% at the Monetary Policy Committee meeting ending on 16 September 2026, according to its official summary. The committee voted 6 to 3 to keep rates unchanged, in a vote that preceded the release of the new labour market data in October. The latest unemployment reading comes after the September meeting, while events between the decision to hold rates and the next decision include the consumer price report and the UK government budget.
On economic activity, UK gross domestic product grew by 0.1% month on month in August 2026, according to the Office for National Statistics, after growth of 0.4% in July. The office left its July growth estimate unrevised, with August's increase slower than the previous month's as monthly growth continued. On the fiscal front, the Treasury confirmed that the UK budget would take place on 28 October 2026, before the publication of the Bank of England's next decision. Chancellor John Healey said in the official budget announcement that its preparation would be based on fiscal discipline and adherence to the fiscal rules. He added: "It will be built on fiscal discipline and will adhere to our fiscal rules", setting out the framework the Treasury said would underpin the budget's preparation ahead of its scheduled presentation.
On the geopolitical backdrop, Asharq Al-Awsat quoted Qatar's foreign ministry spokesperson as saying negotiations between Washington and Tehran over Iran's nuclear programme were continuing. The spokesperson said both sides remained engaged in the diplomatic process, reaffirming Qatar's position that contacts over the nuclear issue were ongoing. Meanwhile, Reuters quoted an unnamed Iranian official in a report on Tuesday as saying Tehran was preparing for renewed Israeli and U.S. attacks. The official said Iran was preparing for renewed attacks, "not for an agreement with America to end the war", according to the agency's report. The Iranian official's comments on military preparations came alongside the continuing negotiations described by Qatar's foreign ministry, leaving escalation risks in place as diplomatic engagement continued.
The next UK events begin on 21 October 2026, when the Office for National Statistics releases its September consumer price inflation report at 7 a.m. UK time. The report follows the August reading, which showed annual inflation rising from July, and precedes the government budget and the next monetary policy meeting. On the same day, Bank of England Governor Andrew Bailey takes part in a discussion in London hosted by the Official Monetary and Financial Institutions Forum at 2 p.m. local time. The session is titled "Central bank independence in an age of financial instability", according to the Bank of England's official events calendar. Following the budget scheduled for 28 October, the bank will publish its monetary policy summary and the minutes of its committee's next meeting on 5 November 2026.