Market moves remain in focus as UK inflation posts its first decline in seven months, boosting expectations for a December rate cut and shifting attention toward the upcoming budget.
Key Insights:
- Prospects for a December rate cut improve while focus moves to budget announcements
- CPI posts its first drop in seven months.
Market Recap:
Currency trading was relatively quiet yesterday, while equity markets extended their recent decline. In the U.S., Richmond Fed President Barkin acknowledged that inflation remains elevated but appears to be settling, and he suggested the labour market may not be as strong as headline data implies. He also pointed to the complications created by delays in economic reporting.
In the UK, BoE Chief Economist Huw Pill noted that underlying price pressures are softer than the headline figures indicate. However, he signalled that it is still too early to push for additional rate cuts and distanced himself from being viewed as one of the Bank’s more hawkish voices. Markets took his tone as broadly dovish.
Today's Market Watch:
UK inflation eased to 3.6% in October—its first decline in seven months—though still slightly above forecasts. Core and services inflation also moved lower. This has strengthened expectations for a December rate cut, now priced at roughly 85%, and the pound softened modestly after the data. Attention will now shift toward the 26 November budget, where political and fiscal uncertainty could increase GBP volatility. If the government delivers a budget perceived as too soft on tightening, markets may question fiscal credibility, which could put further pressure on the currency.
Looking ahead today, investors will be watching the release of the FOMC minutes and Nvidia’s earnings after the close, both of which are likely to influence broader market sentiment.
19th November 2025
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