Tuesday 18th November 2025
🇬🇧 Political and Fiscal Uncertainty Keep the Pound on the Back Foot
Another week closer to the looming budget, and another week in which the Pound underperforms against major currencies. After ending last week with GBP/EUR sliding and Cable holding below 1.32, the new week opens with GBP/EUR at 1.13 and Cable steady at 1.31.Â
The past week was marked by turbulence, as leaks from the Treasury revealed that Chancellor Rachel Reeves may abandon plans to raise income tax. This initially triggered a sharp drop in Sterling, although the currency staged a modest rebound after reports suggested improved growth forecasts. Nevertheless, uncertainty persists around future tax thresholds, and the disorder surrounding the budget leak has further dampened market sentiment. Investors remain wary of what Reeves will ultimately announce, with potential implications for gilt markets and the risk of continued GBP underperformance through 2025 and into 2026.
Adding to the pressure, questions over Prime Minister Keir Starmer’s credibility have resurfaced just 16 months into his tenure. Reports of internal Labour dissent are fuelling concerns over political stability, compounding the economic unease and weighing further on Sterling’s outlook.
US Government Reopens, Markets Eye Data Resumption and Fed Outlook
The longest government shutdown in US history has finally ended after 43 days, following prolonged clashes between Democrats and Republicans. With the government now reopened, key economic data releases, including nonfarm payrolls, are set to resume, restoring a vital stream of information for markets.
The Dollar had strengthened over the past month as expectations for a Federal Reserve interest rate cut in December faded. Where a cut had once been seen as almost certain, markets now price in roughly a 50/50 chance. This shift in sentiment supported the Greenback, but the rally paused as signs of progress toward ending the shutdown emerged. Traders are now looking ahead to the return of official US data, which should provide clearer guidance for Fed policy expectations and determine whether the Dollar’s recent momentum can resume.
🇪🇺 Eurozone Growth Held Afloat by Southern Strength
The Euro begins the week on a steady footing after a period of relative stability against both the pound and the dollar. EUR/GBP opens slightly above 0.88, while EUR/USD starts the week just above 1.16.
 Last week’s GDP data drew traders’ attention, confirming that the Eurozone economy expanded by 0.2% in the second quarter, in line with expectations. On an annual basis, growth reached 1.4%, slightly above the forecast of 1.3%. The results point to an economy that remains steady but lacklustre, demonstrating resilience amid global headwinds, yet still struggling to generate meaningful momentum, with clear divergences persisting among member states.
France and Spain continue to underpin the bloc’s performance, with Spain’s strength driven by robust tourism and solid domestic demand. In contrast, Germany, the Eurozone’s largest economy, remains stagnant for a third consecutive year, weighed down by weak exports and subdued consumer spending. This persistent softness in German activity continues to weigh on sentiment toward the euro, as a healthy, expanding Germany has traditionally served as the region’s key growth engine.
Overall, the Euro’s measured tone reflects a period of calm in European interest rates, as the European Central Bank (ECB) edges toward the end of its easing cycle and markets adjust to a slower, steadier phase of growth across the bloc.
đź“Š This Weeks Market Moving Data
Now that the US has officially moved past the longest government shutdown in its history, attention shifts back to the return of key federal data releases. Thursday’s labour reports take centre stage, with unemployment figures, nonfarm payrolls, and jobless claims all in focus as traders look for fresh signals on the health of the US economy.
In the UK, retail sales data on Friday will be the marquee release ahead of next week’s budget, while in the Eurozone, markets will be watching a significant PMI release on the same day for insights into regional business activity.
Wednesday November 19thÂ
Core Consumer Price Index
In the UK, the Core Consumer Price Index (Core CPI) is closely watched by the Bank of England as it strips out volatile items like food and energy to reveal underlying inflation trends.
Its movements play a crucial role in shaping interest rate decisions, influencing borrowing costs, consumer spending, and ultimately the value of the pound.
Thursday November 20thÂ
US Labour Data Release Post Government Shutdown
Friday’s US labour data, including nonfarm payrolls, unemployment, and wage growth , will be watched especially closely as it’s the first major release since the end of the government shutdown.
With economic reporting back online, traders will be eagerly waiting for the figures for signs of how the economy has weathered the disruption, as the results could strongly influence Federal Reserve rate expectations and drive sharp moves across the Dollar.
Friday November 21stÂ
UK Retail Sales Data ReleaseÂ
The UK Retail Sales data is a great economic indicator of consumer spending as it measures the volume of sales of goods by retailers directly to end customers. A strong reading is generally seen as bullish for GBP, while a weak weeding is seen as bearish.
German Release Of HCOB PMI Release
 On Friday, Hamburg Commercial Bank (HCOB) will release its latest Purchasing Managers’ Index (PMI) data, offering key insights into the health of Europe’s largest economy, Germany. The focus will be on the manufacturing and services sectors, which form the core of this closely watched report.
General Eurozone Release Of HCOB PMI Release
This will then be followed by the HCOB offering the release of the latest Eurozone PMI data as a collective, providing a key snapshot of economic activity across the region’s manufacturing and services sectors.
