Where are exchange rates as we reach the end of November? It was looking like a sorry month for the pound as it fell to its weakest level since April 2023 against the euro. However, the Budget seems to have turned the tide for the moment and GBP/EUR has recovered to its best for several weeks. Against the US dollar sterling also hit a six-month low in early November, though it has bounced back a little since then.
The fall in GBP/EUR was largely because the Bank of England now seems likely to cut interest rates on 18 December. The vote in November to hold was on the narrowest of margins – the nine-member rate setting panel was split five to four.
So a quarter-point cut is expected, especially following some disappointing economic data from the UK, but at least with falling inflation.
What’s going on?
GBP: Weakening economy hits pound
We have come through a busy period for economic data, and most of it pointed towards the Bank of England (BoE) cutting interest rates in December and more sharply through the first half of 2026 than had been expected.
First up was employment and earnings data. The Office for National Statistics (ONS) reported that unemployment hit another post-pandemic high at 5%. Pay rises also eased off again, to 4.6%.
Then the ONS reported that the UK economy had weakened in September by 0.1%. Although this was largely the fault of a cyberattack on Jaguar Landrover that is reported to have cost the UK economy €2bn, that is still a cost to the economy.
However, the main event of this month was the autumn Budgeton 26 November. There were three risks: the fate of the chancellor if received badly, a potential leadership challenge to Keir Starmer and thirdly, the bond markets. We saw in 2022 what happens when they object to a Budget, when GBP/USD fell to its lowest level ever. However, it seemed fine this time around.
GBP/EUR past year
EUR: Mixed picture in quiet period
The euro has been benefitting from the ECB’s early-cut-then-pause stance. Near-term, the bloc’s Purchasing Managers Indexes (PMIs) and national data (especially from its biggest economy – Germany) continues to steer EUR day-to-day. The good news has been improving PMI across the eurozone, with early positive readings being upgraded even more favourably in their final iteration. Tomorrow we hear the new PMI readings though – will they still be positive?
Other than that there are no signs of any more interest rate cuts on the horizon. Inflation is holding steady at 2.1% and economy growth is of 0.2% in the third quarter of 2025 was a little insipid, but bearing in mind US tariffs, could be worse.
The other factor holding up the euro could be the relative weakness of the US dollar as it copes with the end of the government shutdown.
EUR/USD past year
USD: Dollar weakened as shutdown ends
Following a positive month for the US dollar, the past few days have seen it fall back. The reason appears to be the end to the long-running budget stand-off that has shut down the US Federal government for a month and a half.
Why would government getting back to work be bad for the dollar? Mainly because of the idea that interest rate cuts will now restart. Still, that has all been good for stock markets.
We’ve been a short of data during the shutdown, but it’s coming thick and fast now and we have just had a much improved Non-Farm Payrolls result, albeit it in amongst worsening unemployment.
USD/GBP past year
What’s coming up: key events to watch
Looking ahead, several important economic events could influence exchange rates over the next couple of weeks:
- EU, Inflation (28 November): Still under control?
- Global, Final PMI results (3 December): Are they as confident as they appeared in the flash reading?
- EU, GDP and employment (5 December): Are there more signs of growth in the eurozone?
- Germany, Balance of Trade (9 December)
- USA, JOLTs Job Openings (9 December)
- USA, Federal Reserve interest rate decision (10 December)
How to protect your own budget
Exchange rates can shift quickly – and when you’re moving large sums for a property purchase, that can mean thousands gained or lost. Speak to a currency specialist to discuss tools like forward contracts, which let you lock in an exchange rate for the future, shielding your budget from adverse movements.
