Published: 22/10/2025 By ECAP
SUPPRESSED GROWTH
The British Pound has come under renewed pressure following softer-than-expected UK inflation figures and record-high government borrowing. September’s inflation undershot forecasts at 3.8% annually, prompting expectations of a December interest rate cut by the Bank of England. Combined with £20.2 billion in public borrowing, the highest since 2020, markets now foresee tighter fiscal policy in the upcoming budget, which could further suppress economic growth and weigh on the Pound.
The Euro has held relatively steady amid a lack of significant domestic economic data, with its movement largely tied to broader market sentiment. Investors are awaiting guidance from ECB President Christine Lagarde, while cautious global sentiment may lend the Euro modest support due to its perceived stability. Danske Bank projects further gains for the Euro against a basket of currencies.
The U.S. Dollar remains resilient, bolstered by falling gold prices and hopes of progress in upcoming U.S.–China trade talks. Despite a slight pullback in Asian trade, the greenback benefited from improved risk sentiment and expectations of a near-term resolution to the U.S. government shutdown. However, the Dollar’s next major move hinges on Friday’s CPI release, which will offer the first official inflation data amid the ongoing shutdown and growing economic uncertainty.
Data supplied by GC Partners