Monday 13th October 2025
Cautious Tone Builds as UK Budget Looms, Pound Struggles to Find Footing
GBP endured a challenging week, falling to a two-month low and recording its
sharpest weekly drop since January. Sterling faced broad-based pressure, Cable
hitting a 1.5% monthly loss as USD was on course for one of its strongest weeks of
2025. A key driver of the Pound’s decline was the release of the UK’s largest
business survey.
The British Chambers of Commerce’s Q3 business activity report
highlighted that tax and inflation remain the top challenges for ‘bruised’ businesses,
with 21% expecting activity to fall. This deterioration in sentiment has further
weighed on the outlook for Britain’s economy. Adding to the cautious mood, markets
are now focused on Chancellor Rachel Reeves’ upcoming Autumn Budget, which is
expected to play a pivotal role in shaping the UK’s fiscal policy and growth outlook.
As the new week begins, GBP/USD trades around 1.3340, while GBP/EUR holds
near 1.15.
Geopolitical Volatility Halts Dollar’s Momentum
Last week, USD was on track for one of its strongest performances of 2025, with the
DXY Index up around 1.56% , a move not seen since November 2024. Interestingly,
the rally came despite the absence of meaningful economic data, as the ongoing US
government shutdown left traders without key indicators to guide sentiment.
However, market momentum on Friday was driven geopolitical developments.
President Donald Trump reignited trade tensions on Friday, threatening to impose a
100% tariff on Chinese imports and restrict certain key exports.
The announcement came in response to new Chinese export curbs on critical rare earth materials,
escalating concerns of another trade confrontation. The unexpected move rattled
equity markets and dented the Dollar’s hot weekly form with gains becoming
minimal. Both Washington and Beijing have since sought to downplay the escalation,
with analysts expecting a negotiated outcome. Attention now turns to the upcoming
Xi–Trump meeting at the end of the month, where investors hope the two leaders will
set a more constructive tone.
Euro Regains Footing as Political Calm Returns to France
It was a mixed week for the Euro, which found renewed stability following the return
of Lecornu to government. His reinstatement has helped restore a degree of political
calm in France, limiting the Dollar’s recent gains. After resigning last Monday,
Lecornu’s return marks a renewed effort to deliver the 2026 budget and rebuild
market and business confidence after weeks of political turbulence.
With French uncertainty beginning to fade, the Euro has staged a modest recovery , supported
further by a late-week Dollar selloff tied to renewed US – China trade tensions. 2025
has shown that the Euro remains the alternative when the Dollar comes under
pressure from geopolitical risks. This broad-based Euro strength often carries
through to weigh on GBP/EUR during such episodes.
The EUR/USD pair begins the week just above the 1.16 mark after a 0.45% loss, while the Euro strengthened 0.28% against the pound, pushing GBP/EUR to around 0.87.
This Weeks Market Moving Data
Market-moving data in the US remains on hold as the government shutdown enters
its third week, limiting fresh catalysts for traders. Meanwhile, the UK is set to release
key employment figures, and the Eurozone will publish its latest important inflation
data. Due to the delay of US data, Tuesday 14 th October will be a focus for traders as
it is the most significant day of data releases across the week.
Tuesday October 14th
Germany Releases Harmonized Index Of Consumer Prices (HICP)
Germany’s HICP is a key indicator of inflation trends in its economy and as the
largest in the Eurozone – this data can have a major impact on the region’s overall
price dynamics. The data often serves as a leading indicator for Eurozone-wide
inflation and shapes market expectations for future ECB policy decisions.
Uk Release Unemployment Rate and Employment Change Data
This data release serves as a great indicator of the UK economy’s health especially
in a time where business survey’s are pushing the rhetoric of a very weak economy.
Tuesday will reveal how many people are working or seeking work, ultimately helping
economists and policymakers asses the strength of the labour market.
Federal Reserve Chair’s Speech
Amid the government shutdown continuing, key economic data has been delayed,
making Federal Reserve Chair Jerome Powell’s speech one of the few available
insights into the central bank’s policy stance and a potential driver of the Dollar.
Thursday 16th October
European Central Bank President Lagarde will deliver a speech on monetary policy
and will be offering insights into future policy direction.
Tentative Release Dates For US Data (Depending On US Government Shutdown)
Thursday 16th October
Producer Price Index ex Food and Energy
Retail Sales Data
