Economic Update

24 November 2025

UK Budget dominates attention after mixed economic signals

The UK Budget will be released on Wednesday, following intense speculation about its contents. Recent data offered a mixed backdrop: headline, core, and services CPI inflation eased, but retail sales volumes fell sharply in October, with weakness across clothing, footwear, online retail, and food. Public finances also disappointed, as the deficit narrowed less than expected despite higher tax receipts. Consumer confidence dropped more than forecast, reflecting challenges around savings and major purchases.

No significant UK data or Bank of England speeches are scheduled ahead of the Budget. The announcement will dominate the news cycle until the parliamentary vote early next week. History reminds us that some measures have failed to survive beyond the weekend—George Osborne’s “pasty tax” being a notable example.

For FX markets, sterling strength may depend less on positive surprises and more on the absence of negative headlines. Given the prevailing pessimism, even a neutral outcome could trigger a short-term relief rally.

US data flow normalises as markets weigh Fed outlook

Last week’s US calendar concluded with September non-farm payrolls. Job growth exceeded prior months, but revisions lowered July and August figures, and unemployment ticked higher. Market reaction was muted, with attention shifting to Federal Reserve commentary. While most officials signalled little appetite for further easing, NY Fed President Williams noted a cut remains possible. Markets responded by lifting December cut probabilities above 50%, reversing earlier declines.

This week brings September retail sales, PPI, and the November Conference Board confidence survey, alongside Wednesday’s Beige Book. The Fed enters its communication blackout at week’s end. The dollar index remains near 100; a sustained break above 102 would likely require a significant geopolitical catalyst rather than macro data alone.

Euro Area surveys highlight slowing momentum

Recent Euro Area data offered more questions than clarity. ECB officials reiterated that further easing would require compelling evidence, which current data does not provide. Provisional November PMIs for Germany and France signalled softer activity, while consumer confidence weakened. Comments from policymakers stressed caution: Pereira warned of unsustainable growth and market overvaluation risks; Nagel urged bold action on productivity; De Guindos noted encouraging inflation trends, particularly in services.

Today’s German IFO survey showed a modest decline in overall sentiment, driven by weaker expectations, despite a slight improvement in current conditions. Additional confidence indicators and preliminary November CPI figures later this week could weigh on the euro. EUR/USD risks remain skewed to the downside below $1.15.

Canadian GDP likely to reinforce downside risks

Canadian CPI last week showed higher headline inflation but softer core pressures, aligning with the Bank of Canada’s current stance. However, structural challenges persist: weak retail sales, fragile labour markets, and subdued industrial output under US tariff pressure. Fiscal stimulus offers temporary support, but trade negotiations with the US remain unlikely near term.

Q3 GDP, due this week, is not expected to recover Q2 losses. A disappointing print could revive speculation of policy easing in early 2026 and push USD/CAD toward fresh six-month highs.

Mexican data may shape Banxico’s next move

Banxico retains scope for another rate cut before year-end but remains cautious amid Fed uncertainty. September retail sales and October unemployment data could send mixed signals—stronger labour conditions contrasting with weaker consumption. The peso has softened against the dollar, but USD/MXN remains near the lower end of recent ranges; a sustained move above 18.50 would shift focus toward 19.

Author 

Views expressed in this commentary are those of the author, and may differ from your appointed Moneycorp representative. This commentary does not constitute financial advice. All rates are sourced from Bloomberg and forecasts are taken from Forex Factory.