Monday 10th November 2025
🇬🇧 Pound Steadies After Rate Hold, But Further Weakness Looms Ahead
Last week, the Pound remained under sustained pressure against both the Euro and the Dollar, though it found some stability on Thursday after the Bank of England kept its base interest rate unchanged at 4.0%. The Bank, however, signalled a likely rate cut in December.
Governor Andrew Bailey noted, ‘I see further policy easing to come if disinflation becomes more clearly established in the period ahead’. The GBP/EUR pair has now logged three consecutive weeks of declines, driven largely by this month’s rate cuts and market expectations of further easing in December.
Additionally, growing anticipation that the government will raise income taxes in the upcoming budget has weighed further on Sterling. While some short-term stability has emerged following last week’s initial drop, Sterling is expected to remain under pressure as the budget announcement approaches.
The week begins with GBP/EUR trading around 1.370 and GBP/USD just above 1.31, after having fallen as low as 1.3010 ahead of the Bank’s decision.
Historically, the Pound tends to weaken in the run-up to UK Budgets, and with memories of the last Labour Budget still fresh, there is a heightened risk that this pattern could repeat. As the new week begins, Cable starts just below 1.315, while GBP/EUR remains under 1.14, leaving sterling vulnerable to further volatility in the days ahead.
💵 Dollar Slips as Markets Eye December Rate Cut
USD remains under pressure amid the ongoing government shutdown and the resulting scarcity of economic data. With limited domestic indicators to guide markets, attention has shifted to comments from Federal Reserve Chair Jerome Powell.
Powell’s remarks have prompted traders to price in a potential 25 basis point rate cut in December, as inflationary concerns continue to cast a shadow over the US economy. While the US Dollar Index ended the week modestly lower, down around 0.15%, breaking its recent winning streak.
As of writing, the Senate has passed a deal aimed at ending what has become the longest government shutdown in US history. While this does not yet mark a full resolution, it represents a step in the right direction.
Challenges are expected in the next phase as the House of Representatives weighs in, but progress toward reopening the government could help lift market sentiment and potentially push the Dollar back into positive territory.
🇪🇺 Eurozone Economy Holds Firm as Inflation Nears ECB Target
The Euro begins the week trading around 0.878 against GBP and just above 1.16 against the USD. Overall, the Eurozone economy continues to show resilience, with modest growth and improving sentiment. Despite facing headwinds such as US tariffs and a weaker German economy, the bloc still managed to post quarter-on-quarter GDP growth of 0.2% in Q3.
Recent data supports a cautiously optimistic outlook, both the PMI and the European Commission’s sentiment indicators improved in October, suggesting a steady recovery momentum heading into the fourth quarter.
Meanwhile, headline inflation eased to 2.1% in October, aligning closely with the European Central Bank’s target. With inflation now largely under control, the ECB appears committed to maintaining its current policy stance, with no rate cuts expected in the near term.
📊 This Weeks Market Moving Data
An eventful week lies ahead for the UK, with Tuesday’s labour market data taking centre stage. The report could prove pivotal for GBP, as any signs of labour market weakness may weigh on the Pound ahead of this month’s budget. Attention will then turn to Thursday’s GDP release, another key event likely to shape market sentiment and trading direction.
In the Eurozone, Friday’s GDP figures will also draw focus, offering insight into the bloc’s growth momentum amid modest recovery signals.
Meanwhile, in the US, the government shutdown continues, now the longest in American history. Although progress in negotiations has raised some optimism, it remains uncertain whether the federal government’s issues will be fully resolved in time for the release of key economic data this week.
Tuesday 11th November
UK’s Labour Market Data Release
Tuesday’s UK labour market report, including unemployment, wage growth, and claimant count data , will be key in assessing the economy’s strength and inflationary pressures.
The figures could significantly influence the Bank of England’s rate stance and short-term direction of the Pound ahead of the budget.
ECB President Lagarde’s Speech
Lagarde, the leader of the European Central Bank, will deliver a speech regarding monetary policy and will be offering insights into future policy direction.
Thursday 13th November
UK’s GDP Release
Thursday’s UK GDP release will reveal whether the economy is maintaining growth momentum ahead of the budget, directly impacting Bank of England policy expectations and Pound sentiment.
Friday 14th November
Eurozone GDP release
Friday’s Eurozone GDP data will provide a clearer picture of the blocs health and guide ECB policy sentiment, shaping the Euro’s near-term outlook.
