Sterling softens’ as investors price in slower UK growth
Daily Currency Update
Sterling has softened recently as investors price in slower UK growth and looming fiscal tightening ahead of the November 26 Budget. However, today’s Bank of England announcement adds another layer of uncertainty. While analysts believe the Bank will hold rates steady, expect heightened GBP volatility after the press conference.Recent data offered some encouragement - the UK Services PMI rose to 52.3 in October, its strongest reading in seven months, signalling firmer output and new orders. Business confidence is improving, but fiscal concerns remain. Finance Minister Rachel Reeves faces mounting pressure to rebuild fiscal buffers, with the National Institute of Economic and Social Research (NIESR) calling for a £30 billion safety net to avoid a repeat of 2022’s market instability. Meanwhile, rising pension withdrawals suggest households are bracing for potential tax changes.
Key Movers
In the US, stronger than expected ADP employment and ISM Services data supported the dollar, while markets await comments from Fed official Christopher Waller for policy clues. Political headlines continue to create noise. Donald Trump promoted his economic record and trade stance as the Supreme Court reviewed limits on presidential tariff powers. In Europe, attention turned to the political mood as affordability and social justice themes gain traction, reflecting how rising living costs are influencing voter sentiment across advanced economies.Expected Ranges
- GBP/USD: 1.3051 - 1.3073 ▼
- GBP/EUR: 1.1328 - 1.1355 ▼
- GBP/AUD: 2.0041 - 2.0082 ▲
- EUR/USD: 1.1493 - 1.1514 ▲