Sterling remains the dominant story across G10 FX markets as we move into a crucial week shaped by political fragility, weaker UK macro data and rapidly shifting interest-rate expectations. The pound continues to trade on the defensive against the euro, the dollar and most major currencies. Weaker growth, rising unemployment, slowing wage momentum and deep uncertainty surrounding next week’s Budget have forced investors to demand a risk premium to hold sterling. 

This environment will be familiar to regular readers. Throughout October, from Reality Bites to Sterling Under Pressure, we highlighted that the pound looked increasingly fragile beneath the surface. Technical support was weakening, sentiment was deteriorating and the UK’s macro narrative was quietly turning. All of that is now visible in the price action. For now, sterling remains a sell-on-rallies currency until Budget uncertainty clears.  

GBP/EUR - Budget Anxiety and Disinflation Continue to Weigh on Sterling
The pound continues to drift lower against the euro. GBP/EUR remains unable to sustain rebounds and consistently trades below short-term moving averages. The market is assigning a clear risk premium ahead of the November 26 Budget, reflecting days of leaks, counter-briefings and political reversals that have eroded confidence in the government’s fiscal strategy.
Inflation is expected to fall this week, this would reinforce expectations for a December interest-rate cut and potentially another in February. Retail sales and PMI data may create momentary volatility, but neither is likely to shift the broader narrative of a slowing economy and a central bank preparing to ease again.
We warned in early October, in Calm on the Surface, Shifting Beneath, that sterling’s resilience masked deeper fragility. That fragility is now fully visible. Unless the inflation print surprises meaningfully to the upside or the Budget is delivered cleanly without controversy, levels below 1.13 remain firmly in view.
 
GBP/USD - UK Fragility Meets USD Stability
Sterling trades near seven-month lows against the US dollar after a succession of soft UK data releases. GDP grew only 0.1 percent in Q3. September GDP contracted. Unemployment has pushed to a four-year high, and wage growth slowed to its weakest pace since early 2022.
Political instability has added further weight to the currency. Reports of a failed leadership challenge against the Prime Minister rattled gilt markets and accelerated sterling selling. Confidence in UK policy direction remains fragile just days before the Budget.
At the same time, the end of the US government shutdown brings a wave of delayed economic data back into the market. Thursday’s non-farm payrolls report will be pivotal.
 
GBP/CHF -  Swiss Outperformance Amplifies UK Weakness 
The pair slipped below 1.06, reaching multi-year lows as sterling’s vulnerabilities collide with the franc’s structural strength. Rising UK unemployment, softer gilt yields and cooling wage momentum all continue to undermine the pound. Meanwhile, Swiss franc demand has increased sharply following the US–Switzerland tariff agreement, which cuts tariffs from 39 percent to 15 percent.
The SNB appears comfortable with the franc’s appreciation, and CHF is now the best-performing G10 currency. This creates an environment where even modest sterling softness is magnified in GBP/CHF. The pair remains one of the most vulnerable sterling crosses heading into the Budget.
 
GBP/CAD - Range Intact, But the Bias Remains Lower
Sterling continues to drift lower against the Canadian dollar within its long-standing 1.83-1.89 range. The 21-day EMA has consistently capped any recovery, while Canada’s inflation rate remains above target and the BoC signals that its easing cycle is complete.
By contrast, UK inflation is falling and rate-cut expectations are rising. This creates a subtle but persistent divergence that favours CAD. The lower bound of the range at 1.8296 remains the critical support. A break is not the base case for now, but the directional bias remains downward, especially if this week’s UK inflation print undershoots expectations.
 
GBP/AUD - Australian Outperformance Pressures Sterling 
The pair continues to drift lower, with the 21-day EMA acting as a clear technical ceiling. The Australian dollar is supported by strong domestic employment data, a resilient macro backdrop, easing trade tensions following recent US tariff cuts and an RBA that has little appetite for further rate reductions.
The decisive global catalyst this week will be Thursday’s US jobs report. A softer print could weaken the USD and indirectly lift AUD across the G10 complex, intensifying GBP/AUD downside. Sterling’s domestic vulnerabilities add further weight to the cross, keeping a break below 2.00 firmly on the table.
 
GBP/NZD - Kiwi Strength Supported by consistently improving data continues to consolidate between 2.31 and 2.34, but the underlying bias remains lower. New Zealand manufacturing PMI data showed renewed expansion, reducing expectations for further RBNZ cuts.
The pivotal moment will again come from Wednesday’s UK inflation reading. A downside surprise would likely push GBP/NZD below 2.31 and open the door for further NZD outperformance, especially with the UK narrative dominated by political tension and Budget risk.
 
 

 
EUR - Stabilising and Gradually Gaining Ground
Eurozone inflation is trending toward 2 percent, the ECB is effectively done cutting rates and Germany’s fiscal loosening is beginning to support sentiment. PMIs have shown tentative improvement. Against sterling, the euro remains structurally favoured while UK fiscal credibility is being questioned.

USD - Stability Returns as US Data Resumes
The end of the US government shutdown allows delayed economic reports to return, providing clarity ahead of December’s Federal Reserve meeting. Payrolls, jobless claims and PMIs will shape the market’s expectations for further policy easing.
Despite mixed private-sector indicators, the dollar has held firm due to the Fed’s hawkish stance, continued global caution and safe-haven flows. The USD remains the anchor currency for global FX this week.

CHF - Structural Outperformance Continues
The franc continues to strengthen following the US–Switzerland tariff agreement, which significantly improves long-term export competitiveness. The SNB remains comfortable with CHF strength, and there is little sign of intervention. As long as global risks remain elevated and UK fragility persists, CHF will remain structurally supported.

JPY - Policy Tensions Keep the Yen Under Pressure
Japan’s new fiscal expansion plan has raised renewed concerns about debt sustainability and pushed expectations for BoJ tightening further into 2026. Verbal interventions have failed to slow yen weakness, increasing the likelihood of direct FX intervention. The yen remains in a medium-term depreciation cycle.

AUD - Well-Positioned Heading Into Year-End
The Australian dollar remains one of the best-supported currencies in the G10. Robust labour data, improving sentiment from China, softer US inflation pressures and the RBA’s stable policy stance all support further AUD resilience into year-end. A weaker US payrolls print could accelerate AUD gains across the board.

NZD - Soft-Landing Story Supports the Kiwi
The Kiwi has recovered as domestic data improves. PMI readings are back in expansion and expectations for aggressive RBNZ cuts have diminished.

CAD - Steady With a Modest Upside Bias
The Canadian dollar remains firm, supported by inflation that remains above target and a central bank signalling that its easing cycle is complete. CAD is unlikely to surge sharply higher, but it has a stable profile currently.

CNY - Stronger on Flows, Despite Soft Fundamentals
The yuan has reached its strongest level against the dollar in a year, driven by global flows rather than domestic strength. Chinese data continues to highlight weakness in retail sales, industrial output and the property sector. CNY strength therefore remains driven by external factors rather than fundamental economic improvement.

For an overview of how the G10 currency landscape has evolved in recent weeks, check out our previous G10 Currency Outlook. 
 

What This Means for UK Businesses and Investors 
Sterling volatility is likely to increase as markets move closer to the Budget and investors continue to reassess the UK’s fiscal and inflation outlook. For businesses with foreign currency exposure and for private investors managing international assets, the key message is that short-term swings in GBP are being driven less by economic momentum and more by shifts in policy expectations and political confidence. 
Until there is greater clarity on the Budget and confirmation that inflation has stabilised, the pound is likely to remain sensitive to headlines and prone to brief recoveries rather than sustained strength. Businesses may therefore continue to see uneven pricing conditions, while investors should expect GBP to behave as a currency with a fragile underlying trend rather than a clear directional story. 
The broader backdrop is one where sterling can rally on positive surprises, but those moves are still occurring within a wider environment of uncertainty. That dynamic is unlikely to change meaningfully until the fiscal path and interest-rate trajectory become clearer.