Published: 10/11/2025 By ECAP
AT A GLANCE
The British Pound fell to multi-month lows as fiscal uncertainty, tax hike fears, and dovish Bank of England signals continued to undermine investor confidence.
The Euro traded unevenly through the week, gaining late support from stronger German exports but remaining constrained by weak regional economic data.
The U.S. Dollar held firm on safe-haven demand and cautious Federal Reserve commentary, despite market concerns over the prolonged government shutdown.
MIXED PERFORMANCE
The British Pound endured a challenging week, weighed down by pre-budget uncertainty, dovish Bank of England signals, and weak investor sentiment. Moreover, Chancellor Rachel Reeves’s comments confirming tax hikes in the November 26 budget unsettled markets, sparking fears of tighter fiscal policy. Although the BoE left rates unchanged at 4%, expectations of a December rate cut pressured Sterling. Analysts expect continued GBP underperformance, though a post-budget rebound is possible if fiscal clarity boosts confidence.
The Euro experienced mixed performance, initially subdued by stronger global risk appetite and a firmer U.S. Dollar but later finding relative strength against the weakening Pound. Economic data remained patchy; German industrial output and Eurozone retail sales disappointed, offset slightly by better export figures. Looking forward, markets will watch Germany’s upcoming ZEW sentiment index and Eurozone GDP revisions, both likely to influence near-term momentum. Ultimately, the Euro remains resilient but vulnerable to slowing regional growth and external risk shifts.
The U.S. Dollar strengthened last week because of the Fed interest rate decision. There was much market anticipation surrounding the decision however Jerome Powell cut the rate by 25bps as expected and he signalled that any further easing is “far from” happening. Due to the government shutdown, there is reduced amount of data available which means that many in the market will be evaluating the mid-tier labour data releases this week to determine whether dollar strength will continue. Overall, the US dollars recent strength has been determined by the tone set by Jerome Powell however there is scope for some weakening determined by the data releases this week.
Data supplied by GC Partners