Vassilis Karamanis

The pound is coming under pressure as investors brace for potential tax rises and spending cuts in the upcoming UK budget that may exacerbate the economic slowdown.

A Bloomberg gauge of the dollar closed out its worst week in more than two months as expectations of Federal Reserve interest-rate cuts coupled with emerging credit risks in the US banking sector weighed on the greenback.

Sentiment toward the euro soured sharply this week as turbulent French politics prompted options traders to take the most bearish stance on the currency in months.

The dollar briefly climbed to its strongest level in two months as political risks abroad took center stage amid a lack of US data.

The dollar had its strongest week since early August while investors gird for the next flurry of key macroeconomic data — provided readouts aren’t hampered by a US government shutdown.

Pound options suggest traders are growing increasingly concerned about the UK’s autumn budget, with November emerging as a focal point for bets against the currency.

The euro hit its strongest level in four years as traders prepared for an interest-rate cut from the Federal Reserve this week that will cement its diverging trajectory from the European Central Bank.

The dollar capped its deepest weekly drop in more than a month ahead of a Federal Reserve meeting that’s expected to launch a series of interest-rate cuts.

The dollar strengthened the most in a month as investors reached for safe havens amid a broad pullback in global stock and bond markets.

FX markets see unusual calm this August, with volatility sliding despite historical patterns.