The Pound has come under renewed pressure following another round of weak UK economic data. GDP shrank by 0.1% in October, missing expectations and reinforcing concerns that the UK economy may be stalling. That single data point has had an outsized impact on rate expectations, with markets now largely pricing in a cut from the Bank of England this week.
By contrast, the Euro has strengthened across the board, rising nearly 1% against the Dollar and half a percent against the Pound last week. This move reflects a growing belief that the European Central Bank may delay rate cuts, or potentially even consider tightening again if inflation pressures re-emerge. While the ECB has not confirmed any shift in direction, the market is no longer convinced that easing is a foregone conclusion.
The Federal Reserve cut rates by 25 basis points and signalled it is watching the labour market closely. It suggests the Fed is preparing to act more quickly if employment weakens, which would support further easing early next year. Markets are now leaning towards multiple rate cuts in 2026, a stark contrast to the start of this year when inflation risks still dominated the narrative.
Finseta Plc (LON:FIN), formerly Cornerstone FS PLC, is a United Kingdom-based foreignexchange and payments company offering multi-currency accounts and payment solutions to businesses and individuals through its global payments network.
