Published: 29/10/2025 By ECAP
FISCAL GAP
The British Pound fell to a 2 year low against the Euro and saw significant falls against other major currencies. Reports from the OBR highlighted a significant fiscal shortfall alongside a recent FT article suggesting that the Chancellor needed to find an additional £31bn in tax rises. This has caused the sentiment towards Sterling to weaken with many analysts’ expecting further pound weakness however if fiscal conditions improve there is scope for recovery with some pointing to falling gilt yields as a glimmer of hope.
The Euro advanced modestly, demonstrating resilience despite weaker German consumer confidence data. Its stability reflected investors’ preference for the single currency amid reduced global risk appetite. The euro benefited from its defensive appeal, attracting safe-haven inflows as market sentiment turned cautious. Traders now await Eurozone GDP figures and the upcoming ECB policy decision for further direction on the euro’s momentum.
The U.S. Dollar traded mixed on Tuesday as investors await the Federal Reserve’s interest rate decision today. There is an expectation for a 25-basis point interest rate cut which has limited major moves, with the currency firming slightly in a risk-off environment. Overall, markets anticipate that confirmation of the cut could weaken the Dollar modestly, while a larger reduction or dovish guidance might trigger sharper selling pressure.
Data supplied by GC Partners