Market sentiment is steady as hopes for Fed rate cuts grow and the pound begins to recover from recent lows. Stay informed on what’s driving FX markets in our latest update 🔽 💱
Key Insights:
- Markets remain calm as expectations for Federal Reserve rate cuts build.
- Negative sentiment toward the pound appears largely reflected in current pricing.
Market Recap:
The FX markets saw muted movement, even as equity markets pushed higher in a rebound from last week’s declines. Comments from Fed official Daly added to the growing chorus supporting a potential rate cut in December, citing softening conditions in the labour market as a key concern.
Today's Market Watch:
US data releases today are expected to show a slight cooling in consumer activity. September retail sales are forecast to ease to around 0.4% month-on-month, with the core control group barely advancing, underscoring ongoing pressure on lower-income households. The PPI report lands at the same time and is likely to reinforce the recent trend of softer inflation, particularly in categories that filter directly into the Fed’s preferred PCE measure—such as medical services, financial services fees, and air travel. Current estimates point to core PCE running close to 0.21% for the month, while sentiment indicators suggest consumer confidence is gradually slipping.
In the UK, the pound has been clawing background ahead of tomorrow’s Autumn Budget. Markets appear to be unwinding some of their earlier bearish positioning, with traders taking profits after the recent period of GBP weakness. Much of the caution around the fiscal outlook may already be reflected in prices, meaning Chancellor Reeves would simply need to avoid major surprises for sterling to hold steady—or even receive a modest lift. A tighter fiscal stance could help improve the UK’s credibility premium, and with UK yields still elevated compared with peers, any stabilisation in sentiment may provide the currency with additional support.
25th November 2025
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