Weekly Market Update: Nov 28 2025 - Budget Boost for GBP

Softer US data pulls USD off recent highs, while Europe finds pockets of stability and the UK Budget on 26 November injects fresh volatility into GBP as fiscal signals reshape expectations.

US: USD slips as data cools

A series of softer US releases this week, most notably cooling labour market momentum and slower consumer spending trends, shifted sentiment around how long the Federal Reserve can keep rates elevated. With inflation continuing to glide lower, markets nudged rate cut expectations earlier into 2026 and USD eased back from recent peaks.

Implication: USD’s multi-week dominance has softened, and FX markets are increasingly reactive to incremental US data surprises rather than assuming continued USD strength.

Eurozone: EUR edges higher on relative calm

Despite subdued activity data, the euro benefitted from broad USD softness and a sense that eurozone economic conditions are stabilising rather than worsening. Inflation continues to moderate, lowering the probability of additional tightening and creating a modestly supportive backdrop for EUR.

Implication: EUR maintains a gentle upward drift within its range, though still lacks a decisive catalyst for a sustained breakout.

UK: GBP lifted by the UK Budget and improving sentiment

The UK Budget on Wednesday was the major domestic driver. Key announcements included:

• A modest package of business investment incentives, aimed at supporting SMEs and capital spending.
• Further targeted fiscal measures to boost productivity and regional growth.
• A commitment to keep public borrowing on a controlled path, which reassured markets wary of large fiscal surprises.

The combination of restrained fiscal expansion and a focus on growth-supportive initiatives was taken relatively positively by investors. Crucially, the absence of major unfunded commitments reduced concerns about upward pressure on gilt yields. This was also undoubtedly helped by the false start committed by the OBR, where the major beats of the budget were published in its report in the preceding 30 minutes prior to the budget, allowing the market to digest it fully prior to the Chancellor addressing parliament.

GBP reacted with a short-term bounce, aided by the improved risk tone and still-cooling inflation. Sterling strengthened against USD and held firm versus EUR despite ongoing questions around UK growth momentum.

Implication: The Budget gave GBP a credibility boost, helping it outperform peers even as underlying economic data remain mixed.

FX Snapshot & what to watch

• EURUSD: Pushed higher as USD softness persisted, testing the upper end of its recent consolidation zone.
• GBPUSD: Sterling saw a post-Budget uplift, with buyers eyeing continuation if US data continue to weaken.
• EURGBP: Held steady but tilted slightly in favour of GBP following fiscal clarity and a constructive market reaction.

Watch list: US inflation revisions, eurozone confidence indicators, and UK labour-market data, plus any follow-through commentary on the Budget’s fiscal implications.

Outlook

This week marks a shift, as USD’s broad strength has eased, EUR is stabilising, and GBP has been given a Budget-driven repricing tailwind. The key question is sustainability. For GBP, the supportive fiscal tone helps but weak domestic growth remains a limiting factor.

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