Home Daily Commentaries Pound slips as UK’s fiscal hole brought into focus

Pound slips as UK’s fiscal hole brought into focus

Conor Fleming
Written by
Conor Fleming

Conor Fleming

OFXpert

With 30 years of experience in the foreign exchange world, Conor spearheads initiatives to encourage businesses in Germany, Switzerland, and Austria to hedge their foreign currency risks with OFX.

| Wednesday 29 October, 2025

Daily Currency Update



Sterling edged slightly lower over the past 24 hours, trading around $1.3320 vs the US dollar, after softer UK inflation data reinforced expectations of near-term easing by the Bank of England (BoE). With no new comments from BoE officials, markets continue to rely on recent Monetary Policy Committee (MPC) guidance that signals a cautious stance toward rate cuts.

The euro traded largely flat against major peers, consolidating just above 1.1600 versus the dollar as investors await upcoming ECB and Federal Reserve policy meetings. There have been no fresh remarks from ECB policymakers to shift expectations, though earlier commentary from board members suggested the rate-cutting cycle may soon pause.

The US Dollar Index (DXY) hovered just below 99.0, trading mixed over the past day as markets absorbed softer-than-expected inflation data. The slowdown in consumer price growth has bolstered expectations of a slower Fed tightening pace, while steady Treasury yields and safe-haven demand continue to lend the greenback support.

Key Movers



Market attention will focus on upcoming ECB commentary and key euro-area inflation, growth, and PMI data, which will help shape expectations for the next policy move. If the ECB signals confidence that current rates are sufficient, the euro could find support; however, any dovish tone or hints of further easing would likely pressure the currency lower.

The pound is expected to remain data-sensitive, with upcoming UK retail sales, wage, and inflation figures likely to drive direction. Stronger data could ease expectations of near-term rate cuts, lending support to GBP, while softer readings may revive speculation of earlier BoE easing. Broader risk sentiment and US dollar moves will also play an influential role.

The greenback is likely to stay reactive to US economic data and any fresh Federal Reserve guidance. Signs that inflation remains contained or that the Fed may delay policy easing could support the dollar, whereas weaker growth indicators or dovish commentary could trigger renewed selling pressure. Global risk appetite and cross-market developments will continue to shape short-term dollar momentum.

Expected Ranges

  • GBP/USD: 1.3190 - 1.3240 ▼
  • GBP/EUR: 1.1335 - 1.1385 ▼
  • GBP/AUD: 1.9985 - 2.0035 ▼
  • EUR/USD: 1.1610 - 1.1660 ▼

Written by

Conor Fleming

OFXpert

With 30 years of experience in the foreign exchange world, Conor first embarked on his financial career journey as a trainee dealer in BNP Paribas in the early 90s. His professional journey also took him to New York, where he assumed the role of Head of Sales with an Irish bank for a few years. During his tenure at both banks, he was invited to several interviews on Irish television to discuss market turbulence, the factors driving volatility and insights into what could be expected as events unfolded.

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