Weekly Market Update: Nov 21 2025 - UK inflation softens & US jobs relief

Mixed signals across major economies keep FX flows tentative. USD remains supported but shows signs of plateauing, while EUR and GBP edge higher on fading headwinds and shifting policy expectations.

US: USD holding but fatigue creeping in

The backlog of US economic releases following the government shutdown is gradually working its way through, with several catch-up data points reinforcing resilience in labour and activity sectors, not least the stronger-than-expected non-farm payrolls number for September, which surprised on the upside at 119,000 and were more than double the consensus expectations of 50,000.

However, portions of the recovery have already been priced in and markets are looking for fresh catalysts. The minutes of the most recent Federal Reserve meeting revealed policymakers remain cautious about committing to near-term cuts, underlining inflation risks still present.

Implication: USD is likely to maintain a baseline of strength, but the absence of new overt positives means its upside may be constrained, opening the door for other currencies to breathe.

Eurozone: EUR finds its footing

In the eurozone, inflation remains moderate and manufacturing/output data show signs of stability rather than acceleration. With the European Central Bank views showing relative complacency and markets reducing bets on imminent cuts, the euro is inching higher.

Implication: The EUR appears increasingly comfortable in its range and may benefit modestly from USD consolidation, but a breakout requires a more confirmed growth pickup.

UK: GBP nudged higher as inflation softens

The UK headline inflation rate dropped from 3.8% to around 3.6% as per the CPI imprint released on Wednesday, providing early evidence that price pressures may have peaked. This is dovetailing with anticipation that the Bank of England could move to cut interest rates ahead of earlier expectations, essentially pushing the probability of a December rate cut to 85%+, assuming growth doesn’t deteriorate further. Domestic activity remains weak but the change in narrative is helping the pound regain some composure.

Implication: GBP could benefit from easing policy concerns and fading inflation, but its broader performance depends on whether growth stabilises, otherwise the supportive narrative may fade.

FX Snapshot & what to watch

• EURUSD: With USD pausing, EURUSD is testing the upper end of its recent range.
• GBPUSD: GBP is clawing back some ground, but key resistance remains around its recent highs and support is still under downward pressure.
• EURGBP: Cross is holding in a steady band as both regional economies move in tandem with subtle nuances in sentiment.

Watch list: Upcoming US inflation & employment data, latest UK retail/industrial numbers, and any ECB/BoE commentary shifting policy expectations.

Outlook

In this environment of fading strong drivers, USD may settle into a consolidation phase unless unforeseen data shakes the narrative. EUR has potential to drift higher, but slowly. GBP is in a delicate position: the improving inflation story gives it upside, but weak growth will cap performance.

This update does not constitute investment advice. Past performance is not indicative of future results.