The US Senate has approved a bill to stop the government shutdown, but it still needs to be passed by the House and signed by President Trump. Additionally, weaker employment data from ADP supports the expectation of a Federal Reserve interest rate cut, which may affect the US Dollar.

Pound Sterling

The Pound Sterling is the official currency of the UK and ranks as the fourth most traded currency in the world. The value of GBP is mainly influenced by the Bank of England’s (BoE) monetary policy, which focuses on inflation targets. Economic data, including GDP and employment statistics, also affects the direction of Sterling. The Trade Balance data is crucial for the Pound Sterling. A positive balance increases demand for exports and raises the currency’s value. In contrast, a negative balance can weaken GBP, as it suggests more money is being spent on imports. As of November 12, 2025, the Pound Sterling is weakening due to widespread forecasts that the Bank of England will lower interest rates next month. Major banks expect a 25-basis-point cut, reducing the rate to 3.75%. This market consensus is putting downward pressure on the GBP/USD pair. However, we must also consider mixed signals coming from the BoE, which may create opportunities for traders looking for volatility. While many anticipate a rate cut, recent data shows UK wage growth at 5.7%, and inflation in October 2025 was a stubborn 3.1%, well above the 2% target. This suggests that the monetary policy may not be tight enough. If the Bank of England does not cut rates in December as expected, the pound could rally sharply.

US Dollar Challenges

The US Dollar is facing its own challenges. Budget deadlines in December could lead to a government shutdown, similar to past political standoffs. A last-minute agreement could give the dollar a short-term boost, while a failure to secure funding would likely weaken it. At the same time, the Federal Reserve is expected to loosen its monetary policy, which limits the potential gains for the US Dollar. After a weaker jobs report in early November 2025, the CME FedWatch Tool shows a 75% chance of a Fed rate cut in December. This dovish outlook indicates that any strength the dollar gains from political agreements may only be temporary. Create your live VT Markets account and start trading now.

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