By Noam Bennaiche
Last Friday, the pound slipped 0.19%, weighed down by mounting political pressures surrounding British Finance Minister Rachel Reeves, and what her November budget might mean for businesses, households, and overall economic activity. Against the euro, sterling fell further but recovered slightly on Friday afternoon, even though eurozone inflation slipped marginally on an annual basis to 2.1%. The pound ended the week around 1.1380.
Meanwhile, Fed Governor Christopher Waller argued on Friday in favour of additional policy easing to support a softening labour market in the USA.
Today, German and French manufacturing PMIs are due to be released this morning and are expected to remain unchanged. The ongoing US government shutdown is now the second longest since the 2018/2019 episode, meaning we are unlikely to see the release of non-farm payrolls or JOLTS job openings. As a result, this week’s ADP employment data and ISM PMIs may be the only relevant US indicators available.
As we enter November, the pound is likely to remain defensive. The Bank of England meeting on November 6th will set the initial tone, any hint of potential rate cuts in 2026 could place further pressure on sterling. The central bank is expected to hold rates. Mid-month, inflation data from both the UK and the eurozone (November 19th) will be key drivers: a stronger UK CPI could support the pound, while resilient eurozone inflation may bolster the euro.
Attention will then shift to the eurozone PMI figures on November 21st for signs of economic momentum, and to the UK Autumn Budget later in the month, where fiscal direction and borrowing forecasts could influence market sentiment.
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Key data for this month:
Tuesday 6th of November – BoE’s meeting
Wednesday 19th of November – UK CPI
Friday 21st of November – PMI figures in the eurozone