Euro to Dollar Forecast: Week of 5 October 2026 — Bond Yields Drive the Dollar

GBP/USD is forecast to trade between 1.3100 and 1.3450 in the week of 5 to 9 October 2026, GBP/EUR between 1.1650 and 1.1850 and EUR/USD between 1.1150 and 1.1400. There is no central bank decision this week. The ISM Services PMI on Monday afternoon and the Federal Reserve’s September meeting minutes on Wednesday evening are the two events most likely to move the dollar, with the European Central Bank’s meeting accounts on Thursday.

What happened to the pound last week?

Sterling went two ways at once. It fell again against the dollar and rose sharply against the euro, because the week’s big move was not in the pound at all.

GBP/USD at 1.3201 was its lowest ECB reference rate since 25 June, within half a cent of the 2026 low of 1.3160 set that day, and a third consecutive weekly fall. GBP/EUR at 1.1760 was its highest since 20 July.

One caveat on that Friday fix: ECB reference rates are struck at around 13:10 UK time, twenty minutes before the US jobs report landed, so they miss the reaction to it. Pound Sterling Live reported GBP/USD at 1.3231 on Friday afternoon, above the fix.

Why is the dollar still strong when the Fed has just been priced out?

Because the dollar is taking its lead from the bond market rather than from the Federal Reserve’s policy rate, and those two have come apart.

Friday’s jobs report was weak on every line. The Bureau of Labor Statistics reported that “both nonfarm payroll employment (+29,000) and the unemployment rate (4.2 percent) changed little in September”, and revised the two previous months down: “the change in total nonfarm payroll employment for July was revised down by 31,000, from +21,000 to -10,000, and the change for August was revised down by 29,000, from +162,000 to +133,000.” Core PCE inflation had already come in at 3.0% for August, below the 3.4% the Fed’s own September projections carried for 2026.

That took a 28 October rate rise off the table — reported market pricing put the probability at roughly one in four afterwards, having been materially higher before. Yet sterling recovered only a third of a cent, because what is actually supporting the dollar is yield at the long end. The 10-year US Treasury yield touched 5.34% on 1 October, its highest since 2002, “as a global bond selloff extended into the fourth quarter”.

That distinction matters if you have a dollar payment to make. A central bank that stops raising rates usually takes the steam out of its currency; a bond market demanding 5.34% for ten-year money does the opposite, and it does not wait for a Fed meeting. Our USD forecast for 2026 and the dollar index outlook cover both channels.

Three events now collide on 28 October

Wednesday 28 October is now a triple event date:

• The Federal Reserve announces on day two of its 27–28 October meeting.
• The UK Budget is on 28 October, with an updated Office for Budget Responsibility Economic and fiscal outlook the same day.
• The ECB’s Governing Council meets on 28–29 October.

The Bank of England then decides on 5 November with a Monetary Policy Report — eight days after the Budget. That makes the Bank the first major central bank to set policy with the Chancellor’s numbers and the OBR’s forecast in front of it.

The gilt market is already pricing that sequence: the 30-year gilt yield reached 6.07% on 1 October, reported as the highest since 1998. For sterling, the fortnight from 28 October to 5 November carries more concentrated risk than any single release this month, and it is close enough now to matter for a November or December completion.

Will the dollar go up this week?

It may hold its gains, but nothing scheduled is capable of forcing a large move. GBP/USD may trade broadly between 1.3100 and 1.3450.

Monday’s ISM Services PMI at 15:00 is the week’s most useful release, and one sub-index inside it deserves more attention than the headline. In August the Services PMI read 55.4%, up from 54.1% in July, but its Employment Index was 47.8% — below the line separating growth from contraction. Six weeks later payrolls came in at 29,000. The survey saw it first, which makes Monday’s employment sub-index the earliest signal for the October jobs report, and that one lands in November, after the Fed has already decided.

Prices are the other half. ISM services prices paid were 72.6% in August and the September ISM Manufacturing Prices Index jumped to 77.9%. Hiring is stalling while input costs climb — the hardest combination for a central bank to answer, and the question Wednesday’s minutes of the 15–16 September FOMC meeting at 19:00 may illuminate. Our GBP/USD forecast carries the medium-term view.

What does the UK have to offer this week?

Two Monetary Policy Committee speakers from opposite camps. Catherine L Mann speaks on Tuesday at 09:40, having voted for a rise to 4.00% in September; Clare Lombardelli speaks on Thursday at 14:00, having voted to hold. With the committee split 6–3 for a third consecutive meeting, the distance between those positions is the most informative thing in the UK diary.

Thursday’s Bank of England Credit Conditions Survey at 09:30 is the quiet one to watch given where gilt yields have gone: it reports what lenders are doing with credit availability and demand, which is where higher long-term borrowing costs show up first. Our GBP forecast tracks the policy path.

GBP/EUR and EUR/USD forecast

GBP/EUR may hold a 1.1650 to 1.1850 range and EUR/USD a 1.1150 to 1.1400 range. The euro’s problem is the composition of its inflation, not its level.

Euro area inflation jumped on Friday and the euro fell anyway. Eurostat’s flash estimate put annual inflation at 3.8% in September, up from 3.2%, but the detail explains the reaction: “energy is expected to have the highest annual rate in September (18.8%, compared with 14.3% in August)”, while services ran at 3.2% and core inflation — excluding energy, food, alcohol and tobacco — at 2.5%.

A central bank can look through an energy spike. It cannot look through 2.5% core becoming 3.5% core. With core barely above target, a 3.8% headline reads as a cost shock rather than an inflation problem, which is why it bought the euro nothing. Thursday’s ECB meeting accounts at 12:30 show how the Governing Council framed that question on 10 September, when it raised its deposit rate to 2.50%.

EUR/USD fixed at 1.1225 on 2 October, and FXStreet reported an intraday low of 1.1253 last Thursday as the pair’s weakest since May 2025. The EUR/USD forecast page and the pound to euro forecast carry the longer view, and the live currency converter shows the mid-market rate now.

The economic calendar this week at a glance

All times are UK (BST).

Chinese markets are closed for the National Day holiday into midweek, thinning Asian liquidity. Release timings and speaker diaries are as scheduled at the time of writing and can change.

What is the three to twelve month outlook for the pound?

The next scheduled decisions are the Fed on 27–28 October, the ECB on 28–29 October, the Bank of England on 5 November, the Fed again on 8–9 December and the ECB on 16–17 December, with the Budget inside that cluster. For GBP/USD the question is whether long-dated US yields stay where they are, because a 10-year Treasury at 5.34% supports the dollar whatever the Fed does next. For GBP/EUR, sterling holds the wider rate advantage — Bank Rate at 3.75% against an ECB deposit rate of 2.50%, a gap of 125 basis points — and last week showed that advantage can reassert itself when euro area inflation turns out to be an energy story. Our explainer on how unemployment data moves exchange rates covers the mechanism behind Friday’s move.

None of this is settled. A surprising release, a shift in energy prices, a Budget that unsettles the gilt market or a change in the geopolitical backdrop can move a major pair by more than a cent in a session, and a forecast is a framework for planning rather than a statement of where the rate will be on any given day. The currency forecast hub carries the pair-by-pair ranges.

What does this mean for your currency transfer?

Last week shows why the currency you need matters more than the direction of the pound. The same £400,000 bought roughly €5,500 more euros on Friday than a week earlier, and roughly $2,000 fewer dollars. Sterling did not have a good week or a bad week — it had both at once.

Across this week’s ranges, converting £400,000 at an illustrative GBP/USD of 1.3450 rather than 1.3100 gives $538,000 against $524,000 — a gap of $14,000. On the euro side, 1.1850 rather than 1.1650 gives €474,000 against €466,000, a gap of €8,000. For anyone completing a property purchase in Spain or funding a dollar settlement in the United States, that is the spread a single week can open up.

How can you manage the risk around 28 October?

This is a quiet week sitting in front of a crowded fortnight. A forward contract fixes today’s rate for settlement up to twelve months ahead, taking the Fed decision, the Budget, the ECB meeting and the 5 November Bank of England decision out of the equation if your requirement is already known. A market order targets a level you would be content to trade at and executes if the market reaches it, including outside UK hours — which matters when the driver is a global bond market rather than one data release.

Splitting a large requirement into tranches, some before 28 October and some after, spreads the exposure rather than resting it on one Wednesday. Which option fits depends on your deadline and how much movement you can absorb, not on a view about the rate. Our guide on whether now is a good time to buy euros works through the same trade-off.

Frequently asked questions

Will the dollar rate increase this week?

There is no central bank decision and no major US inflation or jobs release this week, so a large move would need a surprise. The dollar starts strong because 10-year US Treasury yields touched 5.34% on 1 October, their highest since 2002. The ISM Services PMI on Monday at 15:00 and the Federal Reserve’s September minutes on Wednesday at 19:00 are the scheduled events most likely to move it. GBP/USD may trade between 1.3100 and 1.3450.

Why did the pound not rise more after the weak US jobs report?

Because the dollar’s support comes from bond yields rather than the Federal Reserve’s policy rate. US payrolls rose just 29,000 in September with unemployment at 4.2%, and market pricing for a 28 October Fed rise fell to roughly one in four — but long-dated Treasury yields stayed near multi-decade highs, which keeps demand for dollars intact.

When is the UK Budget and why does it matter for the pound?

The Budget is on 28 October 2026, with an updated Office for Budget Responsibility Economic and fiscal outlook published the same day. It matters because the 30-year gilt yield reached 6.07% on 1 October, reported as the highest since 1998, so the bond market’s verdict on the fiscal numbers feeds straight into sterling. The Bank of England then decides on 5 November, eight days later.

Is there a Bank of England meeting this week?

No. The Monetary Policy Committee held Bank Rate at 3.75% on 17 September 2026 in a 6–3 vote, and the next decision is 5 November 2026 alongside a Monetary Policy Report. Two MPC members speak this week — Catherine L Mann on Tuesday and Clare Lombardelli on Thursday — and the Bank publishes its Credit Conditions Survey on Thursday morning.

Why did the euro fall when euro area inflation rose to 3.8%?

Because almost all of the increase came from energy, which the European Central Bank can look through. Eurostat’s September flash estimate put energy inflation at 18.8% year on year but core inflation — excluding energy, food, alcohol and tobacco — at just 2.5%, barely above the ECB’s 2% target. A headline driven by a cost shock does not change the rate outlook the way a rise in core inflation would.

What is the minimum transfer Cambridge Currencies handles?

Cambridge Currencies works with transfers from £5,000 upwards, at competitive rates compared with high-street banks. Every transaction is completed by phone with a dedicated specialist, and the firm operates with FCA-authorised partners Currencycloud and ScioPay.

Speak to a specialist before the Budget

If you have a dollar or euro payment falling due around the end of October or in November — an overseas completion, a business settlement or a large one-off transfer — this is the quiet week in which to decide how you want to handle it. Speak to a Cambridge Currencies specialist about timing a transfer around 28 October, or call 01223 608232. Every transfer is handled personally, over the phone, by a dedicated dealer who knows your deadline.

Related guides

• Weekly currency forecast archive — published every Sunday
• Should I buy US dollars now? — how to weigh a deadline against a rate view

Sources: US Bureau of Labor Statistics — Employment Situation, September 2026; US Bureau of Economic Analysis — Personal Income and Outlays, August 2026; Federal Reserve — FOMC calendar and minutes release dates; Bank of England — September 2026 Monetary Policy Summary and minutes; Bank of England — upcoming MPC dates; Eurostat — euro area annual inflation flash estimate, September 2026; European Central Bank — euro foreign exchange reference rates; European Central Bank — Governing Council meeting calendar; GOV.UK — Chancellor’s letter confirming the Budget 2026 date; Office for Budget Responsibility — autumn 2026 forecast date; ISM Services PMI report, August 2026; ISM Manufacturing PMI report, September 2026; Quartz — US 10-year Treasury yield, 1 October 2026; Yahoo Finance UK — 30-year gilt yield, 1 October 2026; FXStreet — EUR/USD, 1 October 2026; Pound Sterling Live — GBP/USD after the jobs report, 2 October 2026. Release timings are as scheduled at the time of writing.