Tuesday 24th November 2025
🇬🇧 Sterling Falls on Budget Jitters and Weak UK Data
Last week, the Pound extended its decline as anticipation surrounding this week’s Budget announcement weighed heavily on sentiment and darkened the outlook for the UK economy.
This, combined with increasingly soft economic data, has led many investment banks to believe the Bank of England will begin cutting interest rates sooner than previously expected. The latest Flash PMI for November fell sharply to 50.5 from 51.8, with S&P Global noting that ‘growth eased markedly since October’. Retail sales were also weaker, down 1.1% year-on-year, while the UK Consumer Confidence Index slipped by two points. These figures reinforced concerns over slowing momentum across households and businesses.
In FX markets, the Pound reacted immediately. Cable fell to 1.30, while GBP/EUR dropped to 1.1330 following the PMI release, leaving November down roughly 0.60%. As the new week opens, GBP/USD is trading just below 1.31, and GBP/EUR sits just under 1.14. All attention now turns to Chancellor Rachel Reeves’ Budget announcement, which is likely to set the tone for Sterling for the remainder of 2025 and early 2026.
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.
Soft Details in US Payrolls and Strong Nvidia Earnings Limit Dollar Strength
Following an extended delay in US data releases caused by the government shutdown, traders finally received key market-moving data with the publication of the Nonfarm Payrolls report. The headline number was strong, showing 119,000 jobs added, more than double the 51K expected, which would typically boost the U.S. dollar.
However, the details told a different story. Unemployment unexpectedly rose to 4.4%, signalling a cooling, not strengthening labour market, while average hourly earnings increased just 0.2%, below the 0.3% forecast. This combination softened the overall message of the report, limiting the Dollar’s upside despite the impressive headline figure. Adding to the Dollar’s moderation, Nvidia’s stronger-than-expected earnings helped lift global risk sentiment. With investors encouraged by the company’s ability to sustain the AI-driven boom, demand for safe-haven assets like USD eased. This improved market mood helped the pound stabilise after recent pressure.
🇪🇺UK Budget Risks Create Opportunity for Euro Strength
In terms of the Euro, the most important near-term catalyst will be how traders interpret the UK’s upcoming Budget. A poorly received Budget has historically created opportunities for Euro strength, as negative market reactions toward UK fiscal policy often trigger Sterling losses. Should sentiment turn sour again, follow-through selling in GBP/EUR into year-end is possible, with the pair potentially drifting toward the 1.10 area.
Looking back to last week, the Eurozone’s own data offered a mildly stabilising backdrop after a week of losses against GBP and USD. Preliminary PMI figures showed that overall business activity grew in November, even though manufacturing slipped back into contraction. The resilience in the services sector prevented a weaker narrative from forming, but the Eurozone’s recovery remains fragile and uneven.
As the new week begins, EUR/GBP trades just under 0.88, while EUR/USD opens around 1.15.
📊 This Weeks Market Moving Data
The marquee market-moving event this week is the UK’s Autumn Budget, to be delivered by Chancellor Rachel Reeves. After months of anticipation, political drama, and numerous leaks, the full details will finally be revealed. Market sentiment heading into the announcement is already subdued, making this a critical moment for both the Starmer government and the Pound.
In the US, attention remains on incoming economic data, with retail sales and unemployment claims standing out as the two key releases that could drive USD volatility. Meanwhile, the Eurozone faces a relatively quiet week on the data front but will be watching the UK Budget closely for any spillover effects into the Euro and broader European markets.
Tuesday November 25th
US Release Of Retail Sales Data
US Retail Sales are a key indicator of consumer spending, measuring the total volume of goods purchased by households. Core Retail Sales data is also released, which exclude volatile categories like autos and gasoline, offer a clearer view of underlying demand. Because they strip out large monthly swings, markets often treat Core Retail Sales as a more reliable signal of consumer strength. Strong Core numbers support the USD, while softer prints can pressure it.
Wednesday November 26th
US Unemployment Claims
US unemployment claims provide one of the timeliest indicators of labour-market health, showing how many people are newly filing for jobless benefits each week. Rising claims signal weakening employment conditions and can weigh on the USD, while falling claims point to labour-market strength and typically supports the currency.
UK Release Autumn Budget
The UK’s Autumn Budget is the most significant event for markets this week, as it will reveal the government’s fiscal plans after months of leaks and speculation. A poorly received Budget has historically triggered sharp Sterling weakness, meaning traders are watching closely for any policies that could undermine confidence or widen fiscal risks.
