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The US dollar was the G10's best performing currency in October.
The US dollar strengthened again against the pound and the euro yesterday. That was despite underwhelming manufacturing data and the joint-longest government shutdown in the country’s history, which the president is now pushing Republicans to end.
In what has been a 2025 to forget for the US dollar, investors could at least take heart that it was the G10’s top performing currency in October. That was primarily the result of an unexpectedly hawkish Fed meeting, as well as rate cuts for other major economies and persistent sterling weakness.
As the lone piece of significant data from yesterday, we might have expected the ISM manufacturing PMI report from the United States to carry more weight. As it happened, markets brushed off the fall from 49.1 to 48.7, despite the report pointing to shrinking new orders, production, and inventories.
Overnight, the Reserve Bank of Australia voted to keep interest rates on hold at 3.6%. The Aussie dollar strengthened against both the pound and the US dollar in the wake of that decision.
Nigel Farage made a significant U-turn on tax yesterday. Seeking to boost Reform’s economic reputation ahead of the next election, Farage ditched manifesto commitments to cut income taxes in favour of fiscal discipline, although he opted to keep many of the specifics hazy, for now at least.
This is an off year for US federal elections, but there are some interesting local races taking place today to keep an eye on. In New York City, a highly publicised mayoral race between Zohran Mamdani and Andrew Cuomo is neck and neck. Democrats are also hoping to gain ground in Maine and Virginia, gubernatorial races that may prove tough nuts to crack.
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GBP: October blues
October brought little to celebrate for anyone holding pounds. As the mood music held at a gloomy drone, sterling weakened by a cent against the euro and by a full three cents against the US dollar. If November is to be any brighter, the autumn Budget must first pass market scrutiny.
GBP/USD: the past year
EUR: Steady but unspectacular
The euro’s story over the past few weeks has been one of steadiness, and while it has performed well against the pound, it is by no means the only currency to achieve that. The euro is near a three-month low against the US dollar and failed to capitalise on weaker manufacturing data.
GBP/EUR: the past year
USD: Tariffs on trial
The Supreme Court will on Wednesday consider a challenge to the president’s sweeping tariff regime. That looks set to be an intriguing test of both presidential powers and the willingness of a partisan court to act as a check on the executive.
EUR/USD: the past year
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