Image © Adobe Images
However, the release of UK inflation data midweek could be key.
Pound sterling looks to build on Friday's recovery and deliver a fourth consecutive weekly gain against the euro this week.
The pound to euro exchange rate (GBP/EUR) managed to end the previous week with a gain, thanks to a heroic 0.50% recovery from Friday's low at 1.1466 to the day's close at 1.1519.
Readers who visited us on Friday morning would have noted the pound was struggling as markets lost composure amidst fears about bad debts circulating in the U.S. banking sector. The pound-euro rate, which is highly sensitive to risk sentiment, struggled amidst the downbeat mood.
But investors ultimately came to the conclusion that there are no systemic gremlins lurking in the system, and loan fears were restricted to a couple of regional lenders, ensuring stock markets recovered, helping the pound higher in the process.
U.S. President Donald Trump also offered some help when he softened his tone on Chinese sanctions in an interview with Fox News. He confirmed he will meet his Chinese counterpart, Xi Jinping, in South Korea at the end of the month for talks.
He added that the direction of travel in Chinese import tariffs was "not sustainable", raising hopes that there was no major trade escalation in the offing.
"Equities on Wall St ended the week in the green, with this rally resulting in the major benchmarks notching a weekly gain, despite what was quite the rollercoaster ride over the last five days," says Michael Brown, Senior Research Strategist at Pepperstone.
The mood shift in equities was duly reflected in the pound-euro exchange rate which also recorded a weekly gain. In fact that's the third consecutive weekly advance for the UK's most important retail rate.
OK sure, the three consecutive weekly gains are 0.23%, 0.18% and 0.19% respectively, hardly a barnstorming performance by the pound, but still something for the bulls to grasp onto and hope a more durable recovery can build.
As we look at the lie of the landscape on Monday it's clear that GBP/EUR is well enough supported, but severely constrained in its ability to advance above 1.15.
Last week's attempt to break above a descending trendline quickly failed, and plotting the 50-day exponential moving average (EMA) on the daily chart reveals the GBP/EUR has failed to close above this level since August 14.
The above technical setup has something of a downward feel, but we are aware that the 50-day EMA is flattening out and this is consistent with further sideways consolidation around 1.15, which offers the chance of Sterling finally breaking through that purple descending trendline in the coming days.
Big picture, the market looks as though it's happy to navigate current levels ahead of next month's budget, which remains the big event risk for pound exchange rates in the coming weeks.
If this is the level at which budget risks are priced by the market, then a big decline in the pound in the coming days is less likely, with significant support from 1.1460 through to 1.1414.
The near-term calendar risk for the coming week is Wednesday's UK inflation report, where the market looks for a rise to 4.0% year-on-year, a figure that will underpin the point that the UK has uniquely high inflation levels when compared with its G7 and European peers.
Such an outcome would almost certainly confirm the Bank of England will leave interest rates unchanged next month.
That being said, any undershoot in the data could encourage market bets for a December rate cut, which would weigh on the pound and result in a 'down week' for GBP/EUR.
However, weakness here would likely be short-lived, as we think a lot of negative news is priced into the pound at this point. The pound will be helped if global stock markets continue to fade trade war fears and manage to advance further.