Monthly Currency Report Summary – October 2025
Overview: October 2025 was a month dominated by shifting monetary policy expectations, renewed global political instability, and an increasingly fragile economic backdrop across the UK, Europe, and the US. The month opened with cautious optimism across the majors following early indications that the Federal Reserve might maintain its dovish tilt through the final quarter of the year. However, by the second half of the month, the market narrative reversed sharply as investors adjusted to more aggressive expectations of UK rate cuts, a slowing Eurozone recovery, and a surprisingly resilient US economy.
Across the major pairs, the GBP/USD (Cable) endured a sustained period of weakness, falling below key psychological thresholds and recording one of its steepest monthly declines of the year. The EUR/USD (Fiber) fared marginally better but still trended lower overall, reflecting stronger Greenback demand amid risk-off sentiment and persistent Eurozone instability. Meanwhile, the GBP/EUR (Chunnel) tracked the divergence between the two European currencies, with Sterling weakness outpacing Euro losses through much of the month before stabilising into month-end as traders sought to lock in profits and prepare for upcoming central bank decisions.
Throughout October, geopolitical tensions, economic policy uncertainty, and shifting interest rate projections defined FX sentiment. The US Government shutdown, UK fiscal concerns, and French political unrest all played crucial roles in directing capital flows. By month-end, the USD had regained its safe-haven appeal, while both the GBP and EUR ended the month on the back foot, with volatility likely to persist into November as central banks confront their diverging challenges.
GBP/USD Performance
Sterling endured a heavy month of declines against the US Dollar, closing October at its weakest levels since the second quarter of 2023. The GBP/USD pair began the month trading around 1.3450, buoyed by expectations of multiple Fed rate cuts and a modest improvement in UK growth data. However, the pair’s fortunes quickly reversed as the month unfolded.
By mid-October, the Cable had fallen decisively below 1.3400, and by month-end it was trading below 1.3200, registering more than a 2% monthly decline. The downward trajectory reflected a perfect storm of domestic weakness and global uncertainty. Early in the month, traders remained cautiously optimistic following dovish Fed commentary, but that optimism faded as political instability in the US failed to translate into sustained USD weakness. Instead, the UK’s deteriorating fiscal outlook—compounded by rising unemployment and slowing consumer activity—triggered a renewed sell-off in Sterling.
Technically, the GBP/USD broke through multiple layers of support, including its 20-day and 200-day moving averages, both of which crossed into negative territory. The RSI consistently hovered near oversold levels in the final week, suggesting that momentum may slow but not necessarily reverse without a major catalyst. Traders grew increasingly convinced that the Bank of England would cut interest rates as early as November, a stark shift from earlier expectations that the next move would come in Q1 2026.
From a fundamental standpoint, the BoE’s communication proved particularly damaging for the Sterling. Remarks from Governor Andrew Bailey acknowledging that interest rates may need to come down sooner than expected—alongside weak retail and employment data—undermined confidence. UK inflation, though moderating, remained high enough to complicate the BoE’s easing ambitions, creating a policy dilemma that left traders reluctant to re-enter long Sterling positions.
Meanwhile, the US Dollar rallied strongly amid easing trade tensions between Washington and Beijing, renewed optimism around global trade deals, and a resilient domestic economy. The Fed’s decision to hold rates at 4.00% reinforced USD strength as investors interpreted the pause as a signal of confidence in US fundamentals rather than hesitation.
By the end of October, the GBP/USD pair was trading near 1.3140, testing long-term support levels last seen in April. Market positioning suggests further downside could be limited in the immediate term, but any recovery will depend heavily on BoE decisions and November’s macro data calendar.
EUR/USD Performance
The EUR/USD mirrored the Cable’s trajectory but managed to hold up marginally better through most of the month. Opening near 1.1750, the pair initially benefitted from a subdued USD and hopes of a modest Eurozone recovery. However, those hopes were short-lived as the Fiber slipped steadily below its monthly moving average, spending most of October trading in the 1.1600–1.1650 range, before dipping towards 1.1570 in the final week.
The pair’s weakness stemmed primarily from a combination of soft Eurozone data, ECB indecision, and global risk aversion. The European Central Bank’s narrative remained cautious, with officials reluctant to signal any clear timeline for rate adjustments. Markets reacted poorly to what many perceived as an uninspiring outlook, with ECB President Christine Lagarde’s remarks on “data-dependence” failing to reassure traders seeking policy clarity.
Compounding the pressure, political instability in France—sparked by the resignation and reinstatement of senior government figures—undermined investor confidence in the region’s economic stability. Bond spreads widened modestly across the Eurozone, particularly in France and Italy, contributing to a mild capital outflow from the single currency.
By mid-month, the EUR/USD fell below 1.1600 as US data continued to outperform expectations. The Greenback’s recovery, driven by stronger retail sales, stable inflation, and improving labour metrics, prompted a series of technical breakouts for the USD across multiple pairs. While traders initially anticipated that the Fed would deliver one final rate cut in December, strong US macro indicators encouraged speculation that policymakers could delay any additional easing until 2026.
Technical indicators reflected this shift clearly: the EUR/USD broke its 20-day moving average early in the month and remained below it throughout October, with the RSI suggesting continued downside potential. However, the pair’s oversold readings by month-end hint at potential consolidation near 1.1550–1.1600 in early November.
GBP/EUR Performance
The GBP/EUR pair endured a volatile but broadly downward month as Sterling’s sharp sell-off against the Greenback outpaced Euro weakness. Starting October near 1.1450, the pair initially showed resilience, rallying towards 1.1550 mid-month on brief cross-market Sterling inflows. However, momentum quickly reversed in the latter half of the month, with the pair falling to 1.1360, marking its lowest point since April 2023.
The decline reflected diverging fundamentals: while the UK’s fiscal and political uncertainty weighed heavily on Sterling, the Euro managed to stabilise despite its own domestic challenges. Early-month data out of Germany and France offered mild encouragement, with the service and manufacturing PMIs surpassing expectations, lending the EUR some short-term resilience. Nonetheless, as cross-market volatility grew and the Greenback strengthened, traders reduced exposure to both currencies, creating erratic swings in the GBP/EUR rate.
Technically, the pair remained trapped within a downward-sloping channel throughout October. Repeated tests of support at 1.1450 and 1.1400 offered brief relief, but the overall bias remained bearish. The RSI frequently hovered near oversold conditions, hinting that short-term corrections were possible but limited in scope.
By the final week, the GBP/EUR began to stabilise, with traders pausing ahead of upcoming central bank announcements. Many speculated that Sterling’s decline had been overextended, particularly given the extent of short-term outflows towards the Greenback. Analysts at major institutions suggested that the pair’s fair-value range may now lie closer to 1.1450–1.1550, pending confirmation of BoE rate cuts in November.
Key Market Influences
- Diverging Central Bank Policies:
October underscored the growing divergence between the world’s leading central banks. The Fed maintained its benchmark rate at 4.00%, signalling confidence in the US economy while pushing back against political pressure from the Trump administration. Meanwhile, the BoE shifted decisively dovish, paving the way for a rate cut as early as November. The ECB, by contrast, offered little clarity, keeping rates unchanged and reinforcing the perception of a hesitant, data-dependent institution. - Political and Fiscal Instability:
Political developments continued to weigh on all three currencies. In the UK, renewed concerns over fiscal sustainability, rising unemployment, and the government’s handling of economic policy under Rachel Reeves undermined market confidence. In the US, the prolonged government shutdown initially hurt the Dollar but ultimately boosted it through safe-haven demand. In France, political upheaval and leadership uncertainty created another layer of Euro risk, discouraging speculative long positions in the single currency. - Global Trade and Geopolitical Tensions:
October also brought renewed optimism around global trade, with Trump and Xi Jinping’s meeting easing tensions and reviving talks of tariff reversals. However, the broader geopolitical picture remained mixed. The lingering Middle Eastern conflicts and ongoing instability in Eastern Europe kept risk appetite contained, prompting periodic flight-to-safety flows into the USD. - Technical and Sentiment Dynamics:
Across all three pairs, RSI and moving-average indicators confirmed bearish momentum for both the GBP and EUR. Market positioning reports indicated an increase in speculative short-Sterling positions to their highest levels since mid-2024. The USD Index (DXY) ended October near a four-month high, reflecting broad demand for the Greenback and the unwinding of earlier dovish bets.
Outlook for November 2025
Looking ahead, November’s FX landscape is poised for heightened volatility as traders recalibrate around central bank decisions and macroeconomic data.
For GBP/USD, the primary focus will be on the Bank of England’s expected rate cut, widely anticipated at the November policy meeting. Should the BoE deliver a 25-basis-point reduction while maintaining cautious forward guidance, Sterling could see temporary relief as traders interpret it as a proactive move rather than panic-driven easing. However, any indication that further cuts are likely could push the Cable below the 1.3000 threshold.
The EUR/USD faces its own headwinds. The Eurozone’s lacklustre growth outlook and political risk premium suggest that upside remains capped around 1.1650, while a sustained break below 1.1550 could trigger renewed selling pressure. Traders will closely watch November’s inflation and unemployment figures, particularly from Germany and France, for confirmation of whether the region is stabilising or continuing to stagnate.
Meanwhile, the GBP/EUR is expected to remain range-bound in the near term, with potential to trade between 1.1400 and 1.1550 depending on central bank divergence. If the BoE moves ahead with rate cuts while the ECB remains on hold, the pair could face renewed downside. Conversely, any soft Eurozone data may lend short-term support to Sterling through cross-flows.
More broadly, the USD outlook remains robust heading into the final two months of the year. With global growth concerns, persistent political uncertainty, and cautious central bank positioning, the Greenback retains its safe-haven advantage. However, the Fed’s communication in December will be crucial in determining whether this rally extends into 2026 or begins to unwind.
Conclusion
October 2025 marked a decisive shift in market sentiment as optimism over global monetary easing gave way to renewed caution and risk aversion. The GBP and EUR both struggled against a resurgent USD, weighed down by domestic uncertainty and political instability. The GBP/USD fell decisively below 1.3200, the EUR/USD slid beneath 1.1600, and the GBP/EUR drifted toward 1.1360 as traders fled European currencies in favour of the Dollar.
While some technical indicators suggest that the sell-off may be overextended, the fundamental picture remains fragile. With the Bank of England poised to cut rates and the Fed maintaining policy stability, divergence across the Atlantic is likely to persist. The Eurozone’s economic malaise adds further weight to the bearish bias on both European currencies.
Heading into November, traders will look for clues on how far the BoE intends to go with easing, how resilient the US economy truly is, and whether the ECB can instil confidence in its policy path. Until those questions are answered, the Greenback is likely to retain its dominance—keeping the Cable and the Fiber subdued, and leaving Sterling’s cross with the Euro caught in a fragile balance between two weakening economies.