Finance
Sterling edges up, dollar hobbled by US shutdown
Published by Global Banking & Finance Review®
Posted on October 1, 2025
3 min readLast updated: January 21, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on October 1, 2025
3 min readLast updated: January 21, 2026
Sterling rose against the dollar as the US shutdown pressured the currency. The UK economy stagnated in Q2, with house prices rising 0.5% in September.
By Amanda Cooper
LONDON (Reuters) -The pound rose against the dollar on Wednesday, as the U.S. currency came under broad pressure after the government in Washington DC shut down over funding to add to investor caution around U.S. assets.
The shutdown carries the risk of delaying key economic reports that filter into the Federal Reserve's decisions to adjust monetary policy.
The central bank meets later this month and, should the shutdown persist, could find itself without meaningful official data. With that in mind, investors will use private sector measures for guidance, such as the ADP monthly employment report later on Wednesday.
Sterling wrapped up September with a 0.4% loss against the dollar, but is still up 7.7% this year, putting it on course for its strongest showing against the U.S. currency since 2017's 9.5% rally. Against the euro, it has struggled, as the single European currency gained 0.8% last month, bringing the increase for 2025 to 5.6%.
LOOKING PAST THE DATA
UK data this week has shown the economy virtually stagnated in the second quarter of this year, while the current account deficit blew past expectations in that time to its widest since the start of the year.
"Investors appeared willing to look past these figures, given the overriding U.S. narrative. We, however, remain cautious," analysts at Monex said.
"Sterling rallies are likely to be capped by domestic headwinds and a Bank of England that we think should be inching toward further easing, especially after the November budget has been delivered."
The pound was last up 0.2% on the day at $1.3475, while weakening against the euro, which rose 0.12% to 87.365 pence.
British house prices rose slightly faster than expected last month, increasing 0.5% in September after a 0.1% drop in August, major mortgage lender Nationwide Building Society said on Wednesday.
According to Nationwide data, Britain's house-price-to-earnings ratio, a key metric of home affordability, is at 5.8, around its worst in a decade.
Real wage growth, meanwhile, has slowed to a rate of 1%, from 3.4% a year ago, as inflation has remained sticky, while workers' earnings have increased more modestly.
British consumers are struggling with persistent inflation, a high tax burden that could potentially increase with finance minister Rachel Reeves' budget next month, and a weakening labour market.
(Reporting by Amanda Cooper; Editing by Ed Osmond)
A currency market is a global marketplace for buying and selling currencies, where exchange rates are determined based on supply and demand.
Monetary policy refers to the actions taken by a country's central bank to control the money supply and interest rates to achieve economic objectives.
Consumer sentiment is a measure of how optimistic or pessimistic consumers are regarding their expected financial situation and the overall economy.
A central bank is a national institution that manages a country's currency, money supply, and interest rates, and oversees the banking system.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power.
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