Finance
Sterling finds its footing after last week's ructions
Published by Global Banking & Finance Review®
Posted on November 17, 2025
2 min readLast updated: January 21, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on November 17, 2025
2 min readLast updated: January 21, 2026
Sterling stabilizes after market turmoil, with UK markets calming. The pound firms against the euro and dollar, but upcoming economic data may influence future trends.
LONDON (Reuters) -Calm returned to British markets on Monday after the previous week's sharp swings, with the pound a touch firmer on the euro and steady on the dollar, trading well above recent lows.
UK markets were roiled on Friday by reports Finance Minister Rachel Reeves has no plans to raise income tax rates in the budget, alarming investors who had been anticipating an increase to help fill an expected fiscal shortfall.
The drama weighed on British government bonds, and dragged on the pound, which hit its weakest on the euro since early 2023.
Things were less dramatic on Monday morning, however, with British government bond yields lower, and outperforming European peers.
The pound strengthened on the euro, which was down 0.1% at 88.1 pence having traded as high as 88.64 pence on Friday.
Versus the dollar, sterling was effectively flat at $1.3166. In a sign of the calmer mood, its high and lows for the day were inside both Friday and Thursday's ranges.
But the calm could be short-lived because of politics and upcoming economic data.
"Whether sterling can continue to fall against the euro at its recent pace is a moot point, but over time it looks distinctly vulnerable," said Kit Juckes, chief FX strategist at Societe Generale.
The euro has gained on the pound for the past four weeks in succession.
Regardless of politics there is also economic data due this week, most notably consumer inflation due Wednesday.
"If we get a softish print in CPI, it looks like that will open the door to a December rate cut," said Juckes.
"The market thinks that's the more likely outcome, it probably thinks its a shoe in if we get that outcome."
The Bank of England held rates steady at its meeting this month, but in a close vote with four of its rate-setting monetary policy committee voting to cut rates by 25 basis points.
At present, markets see roughly a three in four chance of such a cut at the BoE's December meeting.
(Reporting by Alun John, editing by Ed Osmond)
Foreign currency refers to any currency that is not the domestic currency of a given country. It is used in international transactions and can fluctuate in value based on market conditions.
Monetary policy is the process by which a central bank manages the supply of money and interest rates to achieve specific economic objectives, such as controlling inflation and stabilizing the currency.
Consumer inflation refers to the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI).
The UK economy is the economy of the United Kingdom, characterized by a mixed economy with a strong services sector, manufacturing, and a significant financial services industry.
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