Published: 27/11/2025 By ECAP
BUDGET BOUNCE
Sterling is steadier this morning after the Budget delivered no major surprises. While the UK’s long term economic outlook remains challenging, the confirmation of additional fiscal headroom has eased some of the concerns surrounding government borrowing. For now, the sense is that the more extreme risks had already been priced in, helping Sterling recover some ground. The broader direction from here will depend on how the government follows through with its longer term plans to address weak growth and rising tax pressures.
The Euro has strengthened as EUR/USD moves to its highest levels in several months, supported by a weaker Dollar and a stable outlook from the ECB. With inflation easing in the Eurozone and no further policy changes expected in the near term, the Euro has benefited from a calmer backdrop. At the same time, low trading volumes due to the US holiday have added to the softer Dollar, helping the Euro edge higher. While sentiment remains positive, the focus now turns to upcoming commentary from the ECB, which could influence the Euro’s momentum into the end of the week.
The U.S. Dollar continues to weaken as markets build confidence that the Federal Reserve may cut interest rates in December. Recent comments from Fed officials highlighting softer labour conditions have added to expectations that policy easing could be on the way. The Dollar Index has fallen to a four-month low, and yesterday’s stronger durable goods data had little to no impact. With the US Thanksgiving holiday keeping volumes light, the Dollar is likely to remain subdued until next week’s key releases provide clearer direction.
Data supplied by GC Partners