The market no longer expects the Bank of England (BoE) to cut rates in its November meeting. Current market estimates suggest a minor easing of 2 basis points in one month and 12 basis points in three months. The BoE’s decisions in 2025 will likely be influenced by the UK budget announcement on November 26, which could affect the country’s growth and inflation outlook. Recently, the pound has remained stable compared to its G10 counterparts. Although it has dipped against the USD and the EUR, the EUR/GBP pair is likely to rise slowly into next year, with the USD possibly falling back to the 1.32 area over the next three months.

Global Economic Outlook

Global economic stability is still uncertain, as highlighted in the International Monetary Fund’s October 2025 World Economic Outlook. The report made a slight upward revision to global growth forecasts, but overall growth remains weak. It also discusses the best brokers in 2025, taking into account various trading needs and regional strengths, including brokers with low spreads, high leverage, and those optimized for specific markets like EUR/USD and Gold. The market has already removed the expectation of a Bank of England rate cut for the upcoming meeting on November 6, a sentiment that has been building since August. This is evident from the latest inflation data from September, which showed headline CPI at 2.4%, remaining above the BoE’s target. Derivative traders should consider reversing any remaining bets on rate cuts for the fourth quarter of 2025. In early August, the BoE cut rates amid unexpectedly cautious comments from Governor Bailey regarding the labor market. Recent data supports this caution, with the unemployment rate steady at 4.1% and average weekly earnings growing robustly at 5.5% annually. These figures suggest that price pressures are not easing as quickly as hoped, making further cuts this year unlikely.

Impact of the UK Budget

Attention is now focused on the UK’s budget announcement on November 26, which will play a bigger role in shaping policy for 2026 than the BoE’s immediate messages. This budget is expected to set new fiscal guidelines that will directly affect the outlook for UK growth and inflation. We believe that strategies benefiting from increased volatility around this date could be wise. In the currency markets, the US dollar is likely to remain strong for the next few months, boosted by a strong jobs report for September that showed non-farm payrolls adding 210,000 jobs, surpassing expectations. This supports the view that the Federal Reserve will keep rates steady, making it tougher for the pound. We see the potential for GBP/USD to drop towards the 1.32 level before the year ends. Against the euro, we expect the pound to continue its slow decline, with EUR/GBP rising gradually into the new year. While UK inflation is a local concern, recent sentiment surveys, like the German ZEW Economic Sentiment index, have shown a cautious improvement in the Eurozone’s outlook. This slight divergence favors a stronger euro relative to the pound in the coming weeks. Create your live VT Markets account and start trading now.

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