The week started off with a steep dive for sterling against the euro. But just when you might have worried that it was a start of the great Budget unravelling, GBP recovered most of those losses.
And just as well, on a day with several pieces of good news for the UK economy.
The prime minister took to the stage defending the chancellor. But also in his speech the PM promised to implement the Fingleton Review in full. This is a new report on why Britain is the most expensive place to build nuclear power stations in the world and more generally on how to solve the UK’s inability to ‘get things done’. Starmer said he would implement the review in full to remove “pointless gold-plating, unnecessary red-tape, well-intentioned, but fundamentally misguided environmental regulations.”
Meanwhile, in the eurozone there were disappointing final results for the Purchasing Managers Index (PMI), with a downgrade on the early reports for November. German manufacturing PMI of 48.2 was the sharpest contraction since February. The USA’s was also 48.2, with anything under 50 denoting overall pessimism. The UK’s manufacturers on the other hand were in optimistic mood for the first time since October 2024 at 50.2.
Could a new rate cut be required in Europe? We’ll get the inflation result for the eurozone shortly – along with unemployment – with the ECB’s next rate decision now just two weeks away.
The dollar has been gradually weakening as the chance of a rate cut from the Federal Reserve next Wednesday has become a racing certainty.
With thoughts turning to Christmas, if you’re feeling priced out of gold right now and were thinking of silver gifts, well that also hit an all-time high yesterday, up 7% from Friday and twice the price of last year.
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