Pound Sterling (GBP)
The British Pound weakened as the UK labour market continued to deteriorate, with payroll employment falling by 93,000 between August 2024 and August 2025. HMRC figures revealed eight consecutive months of job losses, increasing pressure on the Bank of England to lower interest rates. In addition, fiscal uncertainty ahead of Chancellor Rachel Reeves’s upcoming budget – expected to feature substantial tax rises – further dampened market sentiment. Consequently, Sterling lost ground against both the Euro and the US Dollar.
Euro (EUR)
The Euro came under pressure at the beginning of the week amid renewed political instability in France, following President Macron’s controversial decision to reappoint Sébastien Lecornu as Prime Minister. Markets viewed the move as a temporary solution, leaving the Euro exposed to further political turbulence. Investor caution was also heightened by ongoing fiscal uncertainty, particularly in France. While the Euro managed slight gains against a weakening Pound, it slipped slightly against the Dollar.
U.S. Dollar (USD)
The US Dollar saw its strongest investor demand of the year, as hedge funds and asset managers stepped up purchases, particularly against the Pound and the Euro. Safe-haven demand was reinforced by geopolitical tensions – notably with China – and the continuing US government shutdown. Looking ahead, attention is focused on the forthcoming speech by Federal Reserve Chair Jerome Powell, with markets seeking guidance on the timing of potential rate cuts. Despite domestic political challenges, the Dollar remains well-supported by broad investor appetite and global risk aversion.