G10 Currency Outlook 27th October 2025

The week ahead looks steady on the surface, but plenty is moving underneath, building on themes from our recent central bank and trade analysis.

For UK business owners and investors, this is one of those weeks where tone matters more than numbers. Policy direction, trade diplomacy, and liquidity shifts are setting the stage for where opportunity and risk will lie next. 

The Federal Reserve is expected to cut rates again this week, even as inflation drifts lower toward three percent. More importantly, the Fed is ending its quantitative tightening programme, which means financial conditions are easing as liquidity improves. 

This combination of lower rates and a larger balance sheet supports global markets but limits the dollar’s upside. Dollar strength may fade over the medium term, particularly if other economies hold steady while US data remains patchy due to the ongoing government shutdown. 

Short term, the dollar may hold firm. Longer term, the softer policy tone points to gradual weakness into 2026. 

The European Central Bank meets on Thursday and is expected to keep rates unchanged. Recent PMI data, especially from Germany’s service sector, shows early signs of recovery, suggesting that fiscal stimulus is beginning to take effect. 

President Lagarde is likely to favour stability over new stimulus. That should allow the euro to consolidate recent gains and remain a steady anchor while US policy evolves. 

The ECB appears to have reached the end of its rate-cutting cycle. Expect a calm and balanced tone from here. 

Sterling is holding in a tight range. Inflation has cooled slightly but remains well above the two percent target. Markets now see a strong chance of a rate cut in December, although that is far from guaranteed. 

The focus is now on the Autumn Budget in November. Fiscal choices on spending and tax will set the next direction for the pound. A credible, growth-focused budget could steady sentiment, while a tax-heavy or cautious approach could weigh on confidence. 

For now, the pound stays neutral, waiting for fiscal clarity. 

The yen remains under pressure as Japan’s new government continues to expand fiscal spending, which has raised concerns about national debt. The Bank of Japan meets this week and will almost certainly hold rates steady, although markets are already anticipating a potential hike early next year. 

If the dollar-yen rate moves closer to the 155 to 160 range, talk of official intervention will likely intensify. 

Policy patience keeps the yen weak, but any sign of intervention could trigger a sharp bounce. 

The Swiss franc gained early last week before easing as global risk sentiment improved. Exports remain resilient despite US tariffs, and domestic demand looks stable, but the franc tends to weaken when global tensions ease. 

Less uncertainty means less demand for safety, so the franc may continue to drift slightly lower. 

Despite renewed US tariff threats, the Canadian dollar held firm. Higher-than-expected inflation data supported the currency and kept the Bank of Canada cautious, even as it prepares for a modest rate cut this week. 

Strong oil prices are also helping the loonie stay supported. Canada’s currency should remain stable to slightly stronger against the dollar in the near term. 

The Australian dollar has picked up momentum thanks to a better tone in US–China trade relations. Domestic data also looks solid. If upcoming inflation figures show renewed upward pressure, the Reserve Bank of Australia could pause any further rate cuts. 

The combination of improving global sentiment and stronger domestic data points to a gradual recovery for the Aussie dollar. 

New Zealand’s inflation data came in line with expectations, showing a steady economy that continues to cool gently. The Reserve Bank of New Zealand is expected to deliver one more rate cut next month, but for now, the currency is moving in line with global risk appetite. 

The kiwi tends to rise when optimism improves and soften when sentiment fades. With trade optimism back on the table, it should stay stable with a mild upward bias. 

Oil prices climbed more than eight percent last week, lifting the Norwegian krone. With the Norges Bank unlikely to cut rates further this year, the krone should remain supported as long as oil stays above eighty dollars per barrel. 

Energy strength and solid fundamentals continue to work in Norway’s favour. 

The Swedish krona finished last week near the top of the G10 performance table, supported by improving global sentiment. Upcoming GDP and retail data will provide more direction, but for now, the krona is closely tied to shifts in risk appetite rather than domestic news. 

A positive tone globally keeps the krona firm. 

Markets are entering a phase of cautious optimism. The Federal Reserve is easing, the ECB is steady, and Japan remains patient. This mix creates a calmer trading environment in the short term. 

Liquidity is also improving as the Fed ends quantitative tightening, which could quietly boost risk appetite into November. 

For UK businesses and investors, that means opportunity. Timing matters. With major currencies now trading within defined ranges, planning international payments or investment transfers around key central bank decisions could help capture better value. 

Strategic summary: 

At Lamera Capital, we help UK firms and investors navigate these shifts with precision. We focus on timing, execution, and risk management so that currency movements work in your favour rather than against you.
 
If your business trades internationally, holds overseas assets, or plans cross-border investments, this is the time to plan ahead, not wait for the market to decide for you.