Markets expressing doubts over recent UK budget
Daily Currency Update
Sterling lost momentum yesterday, with GBP/USD easing to around 1.3205 as markets reassessed the UK budget. Optimism faded amid doubts over the budget’s long-term fiscal impact, particularly delayed tax changes and weak productivity trends. With no UK data today, GBP is likely to follow broader risk sentiment and USD direction, keeping it range-bound and vulnerable to external shifts.The euro held steady around 1.159–1.160, moving mainly on global flows rather than domestic drivers. With no major Eurozone data and stable ECB expectations, EUR remains reactive to changes in US sentiment or dollar moves.
In the US, the dollar traded slightly softer but stayed firm against GBP as markets continued to debate the timing of potential Fed cuts in early 2026. Liquidity remains thin post-Thanksgiving, limiting volatility. With no major data today, USD direction will depend on risk appetite and any Fed commentary.
Key Movers
Next week brings euro-area PMIs, business-survey data, and activity indicators, followed later by GDP or industrial-production updates from major economies like Germany and France. These releases typically drive EUR sentiment and provide early signals on regional economic momentum.The U.S. calendar includes PMIs, inflation data, retail figures, and labour-market indicators. Strong readings—especially on consumers, jobs, or inflation—could lift the dollar and reignite hawkish Fed expectations. Markets will also be alert for any shifts in tone from the Federal Reserve ahead of its next meeting.
UK labour, production, or growth data soften, markets may read it as weakening momentum, putting pressure on GBP. Stronger-than-expected data, however, could revive speculation about BoE policy tightening and support the pound.
Expected Ranges
- GBP/USD: 1.3102 - 1.3255 ▼
- GBP/EUR: 1.1332 - 1.1420 ▼
- GBP/AUD: 2.0240 - 2.0260 ▼
- EUR/USD: 1.1505 - 1.1610 ▲