01/11/2025 by Tony Redondo
Currency Exchange Rates Update
The Pound Sterling was well and truly dumped in October, dropping against 98% of global currencies, its worst month since September 2022 (Truss/Kwarteng mini-Budget turmoil) and recording its worst monthly run in nine years against the Euro. Last month, the Pound lost nearly 1.6% in the last four trading days of October and hit its lowest levels against the Euro since May 2023.
Against the US Dollar, the Pound dropped over 1.1% last week and nearly 2.6% in October to hit its lowest levels since April while the US dollar index logged its second monthly gain of 2025.
The Pound dropped 1.45% against the Australian Dollar; 1.95% against the Canadian Dollar and nearly 1.8% against the Rand last month and at one point, hit its lowest ever level against the Swiss Franc.
The catalyst for the Pound’s horror week centres over a possible downgrade to the UK’s productivity outlook by the OBR (Office for Budget Responsibility) of 0.3%, more than markets had anticipated. According to the IFS (Institute for Fiscal Studies), that could add over £20bn to public borrowing by 2029–30, significantly deepening the fiscal gap. Chancellor Rachel Reeves now faces the prospect of finding an additional £25–30bn to balance the books in her second budget announcement of 26 November. That’s before factoring in the £5bn cost of scrapping planned welfare cuts and growing pressure to lift the two-child benefit cap. Reeves is hoping that lower borrowing costs and stronger growth will soften the blow, otherwise circumstances may force her hand to increase direct taxes and breach Labour’s election pledges of 2024.
The bond markets are on red alert. Any sign that Reeves will lean too heavily on borrowing will very likely spark a backlash reminiscent of September2022.
The Pound is caught in the crossfire between fiscal reality and political constraint and its outlook hinges not just on the numbers but on how convincingly Reeves can tell this government’s story. Blaming Brexit hardly convinces as the actual data proves otherwise. After adjusting for inflation, the OECD (Organisation for Economic Co-operation and Development) data shows the UK economy has grown by 12% since June 2016, lagging the US (25%) but on par with France (12%) and double Germany’s 6% growth.
October’s UK inflation data has increased speculation that the BoE (Bank of England) will resume cutting interest rates before the end of 2025, stripping away the Pound’s last remaining support. The markets now assign more than a 60% chance of a 0.25% cut by December, up from just 20% a month ago. Two interest rate cuts are fully priced in by mid-2026. The BoE meet on Thursday and have their final meeting of 2025 on 18 December. Another close call is expected this Thursday with the majority of analysts expecting a 5-4 decision to leave the Bank Rate unchanged at 4%.
Interest Rates in Focus – Cosmos Currency Exchange
This week, the key economic data releases include:
Monday UK / EU / US PMI Manufacturing
Tuesday Australia RBS Interest Rate Decision
Wednesday Sweden Riksbank Interest Rate Decision
Thursday UK BoE Interest Rate Decision
Norway Norges Bank Interest Rate Decision
Friday China Trade Balance
UK Halifax House Prices
US NFP Employment and University of Michigan Consumer Sentiment Data
What’s in the news?
The latest polling from Opinium shows both Prime Minister Keir Starmer and Tory Leader Kemi Badenoch with a three-point hit to their approval ratings this week with Starmer languishing on -45, while Badenoch sits at net -17. Reform leader Nigel Farage has also declined in popularity this week, down to -13. This is the ninth consecutive Opinium poll in which Keir Starmer’s net approval rating has been on net -40 or below. Reform continues to lead on voting intention among the public at 30% (-2), followed by Labour on 20% (-2). The Conservatives are unchanged at 18%, followed by the Lib Dems on 12% (+1) and the Greens 12% (+2).
A poll by Survation, commissioned by the IPPR Scotland think tank has given Nigel Farage a boost with Reform overtaking Labour in Scotland to become second biggest party in the Scottish parliament. The survey suggests Reform would return 22 MSPs next May. The SNP would remain Scotland’s biggest party with 34, but John Swinney would not have a majority, with Labour slipping to third with 18.
A new YouGov survey brings further bad news for the Labour government with just 17% support, just one point ahead of the Green Party. Reform is significantly ahead on 27%, up one point despite recent rows and difficult headlines. The Tories are tied with Labour on 17%, while the Lib Dems are just behind the pack on 15%. According to the Electoral Calculus prediction tool, if played out at a general election, this would result in a Reform majority of 60, with Nigel Farage leading 355 MPs into government. By contrast, the second-largest party would be the Lib Dems, who would form the official opposition with 72 MPs. Labour would be third with just 68 MPs, while the Tories would fall into sixth place behind the Green Party and the SNP. Kemi Badenoch would hold on to her Essex seat but would be joined by just 30 Tory colleagues on the green benches. The SNP would win 45 seats and the Greens 41 MPs.
Less than two months after the former housing secretary and Deputy PM Angela Rayner resigned after she admitted to not paying enough stamp duty on the purchase of a flat in Hove, it’s the turn of Chancellor Rachel Reeves to come under fire over her property assets. Reeves received a sharply worded email from Sir Keir Starmer criticising the Chancellor for misleading suggestions that she did not know she needed a licence to rent out her family home. Reeves has had to backtrack from earlier suggestions that she and her husband had not been aware of the Southwark Council rental rules. A spokesperson for Southwark council has implied that the local authority will not fine Rachel Reeves for her breach of housing rules. If Reeves were to face the full ire of the council and her tenants, she would be liable for up to 12 months of rent, or £38,400. The revelations come just days after the Renters Rights Act received royal assent to become law.
UK
House prices in the North of England have seen significant price increases in the last year, with the Northeast experiencing a 6.6% price rise and the Northwest experiencing a 4.5% jump according to the House Price Index. However, London has seen a 0.3% annual property value drop. Homes in the Southeast and Southwest also saw smaller price growth compared to their northern counterparts, with the Southeast up 1.8% and the Southwest up 2.4%.
Good news
The PRA (Prudential Regulation Authority) plans to increase the amount of savings that are protected if a financial firm goes bust from £85,000 to £110,000. The new rules are expected to be confirmed in November, with implementation set for 1 December.
Not so good news
Research by the pollster Opinium, commissioned by Hargreaves Lansdown shows that a rise in income tax rates is at the top of the list of pre-Budget fears. Chancellor Rachel Reeves has signalled that she will raise taxes next month despite saying last year she would not “come back” with more demands. Across the UK population, a rise in VAT and council taxes were respectively second and third on the list of fiscal fears.
Data released by deVere Group, one of the world’s largest independent financial advisory organisations, shows Budget rumours have driven a 45% spike in enquiries from clients about taking lump sums from their pensions over the past month. The sharp increase comes amid widespread speculation that Chancellor Rachel Reeves will use her second budget on 26 November to cut or cap the tax-free pension lump sum, currently allowing savers to withdraw up to 25% of their pension pot tax-free, up to around £268,275.
A survey by the CBI (Confederation of British Industry) suggests firms face a difficult winter as tax fears hold growth back and private sector activity set to fall in the next three months. Its weighted balance for expectations in the next three months remained at -20 in October while its output volume figure for the previous three months was also left at a low not recorded at any time over the last two years. Business volume in the consumer services sector was expected to decline at a faster pace than business and professional services. Distribution sales and manufacturing are also set to suffer from further declines in activity in the run-up to Christmas.
Begbies Traynor, one of the UK’s largest insolvency practitioners has warned that more than 55,000 businesses are in “serious financial distress” as the “economy is in real trouble.” Their quarterly Red Flag Alert report strongly advises the Chancellor that her Autumn Budget “must deliver urgent support to avoid a wave of failures.”
Rachel Reeves ‘brutal’ economy blamed for Pizza Hut closures | UK | News | Express.co.uk
Doctors, Lawyers, Accountants, and other professional services LLP firms are facing a potential major shakeup of their tax and business structures amid speculation that Rachel Reeves may add Employer NICs (National Insurance Contributions), at around 15% to members of LLPs (Limited Liability Partnerships).
The BRC (British Retail Consortium0 says shoppers are being hit with higher grocery bills and fresh food prices are soaring at their fastest pace since 2024.
The retail sector is preparing for a challenging Christmas as shoppers delay spending due to concerns over potential tax increases in the upcoming Budget. Andrew Goodacre, chief executive of the British Independent Retailers Association, said “The timing of this year’s Budget could not be worse. By leaving it till late November, the Chancellor is disrupting the most important trading period of the year for retailers.”
The BRC and UK Hospitality have warned that Chancellor Rachel Reeves’s proposed £1.7bn business rates overhaul may force hundreds of sites to close and could put 120,000 high street jobs at risk.
Adzuna, a leading job advertisements search engine says that vacancies in the UK fell to their lowest level of 2025 in September. This came as employers adopted a cautious approach ahead of the Budget amid expectations of higher taxes.
UK asset management company Rathbones have warned that almost two thirds of charities have axed workers and vital services as they come under pressure from falling income, staff burnout and declining public donations.
North Sea oil and energy services group Petrofac has appointed administrators, putting thousands of jobs at risk. The company said it took the decision after one of its customers, TenneT, terminated its relationship over a 2GW energy programme in the Netherlands. Petrofac added that its operations will continue to trade, and options for alternative restructuring and M&A solutions were being “actively explored”. The collapse of the company would represent yet another blow to government efforts to lower energy bills and protect jobs across British industry.
Eastern Airways with around 1.3 million passengers per annum is on the brink of collapse and has filed a notice to appoint administrators leaving them just days to sort their issues or it will officially shutdown.
The cyberattack on JLR (Jaguar Land Rover) reduced UK car manufacturing by 27% to its lowest September level since 1952. According to industry watchdog, the Cyber Monitoring Centre, it’s estimated to be the most damaging cyberattack in British history and cost the economy around $2.5 billion, shutting down production not just in the UK but around the world.
USA
Private-sector business activity continued to grow strongly in October with the PMI (Purchasing Managers Index) rising from 53.9 to 54.8, signalling healthy economic momentum at the start of the fourth quarter of this year.
US consumer prices rose 0.3% in September, slightly below the 0.4% forecast. Analysts noted that while prices continue to rise, the pace remains controlled. The headline annual US inflation number was reported at 3%, below forecasts for 3.1%, while the core annual number was also 3% and similarly below forecasts for 3.1%.
A new Conference Board survey shows US consumer confidence fell again in October, even as Wall Street hit new highs with Americans increasingly fretting about rising costs, the labor market and the ongoing government shutdown.
Nearly 1 million American workers have lost their jobs so far this year, the most since 2009, excluding the spike in spring 2020. Tech companies are leading the cuts, with Intel, Microsoft, Meta, and others contributing to more than 107,000 jobs eliminated this year, according to Challenger, Gray & Christmas. But cuts at Target, Exxon, and PwC show the pain goes beyond Silicon Valley. Amazon will cut 30,000 corporate jobs from this week as the company is looking to use AI (artificial intelligence). Human resources, device and services, operations and Amazon Web Services (AWS) is expected to be targeted in the jobs culling.
Nvidia has become the world’s first $5tn company after the US chip giant’s stock was propelled by strong sales of its artificial intelligence systems and the prospect of expanded access to the Chinese market, putting the company well clear of Microsoft at $3.76 trillion, Apple at $3.12 trillion, Amazon at $2.40 trillion, and Alphabet at $2.21 trillion. Nvidia’s $5 trillion market cap is staggering, beating all but the top three economies in the world including Germany’s $4.5bn GDP, the world’s fourth biggest economy.
The EU
The eurozone economy grew a better-than-expected 0.2% in the third quarter of 2025. Growth was largely supported by strong performances in Spain (0.6%) and France (0.5%). At the opposite end, the German and Italian economies both narrowly avoided technical recessions.
Inflation in the Eurozone stood at 2.2%, still above the ECB’s 2% target.
Credit rating agency Moody’s maintained France’s Aa3 credit rating but revised the outlook from stable to negative citing growing risks from political fragmentation that could hinder efforts to reduce the country’s deficit. Moody’s decision will come as a relief to the French government, following recent downgrades by Fitch, DBRS, and S&P Global over the past month.
The Netherlands swung back from the populist right to the centre-left in last week’s elections, a shift with broad European implications. The initial major change occurred approximately two years ago when the anti-immigration, Party for Freedom (PVV) led by Geert Wilders achieved a shock victory amid voter frustration over issues like immigration and a severe housing crisis. However, the resulting right-wing coalition collapsed within months due to internal disagreements over immigration policy. This collapse triggered a snap election that became viewed as a direct “referendum on the far right.” In this subsequent vote, the centrist, liberal-progressive Democrats 66 (D66) party, led by 38-year-old Rob Jetten, made spectacular gains and narrowly defeated Wilders’ PVV in a razor-thin race. This victory, fuelled by the D66’s campaign of “pragmatic optimism” and a successful effort to reclaim national symbols of pride, signified a decisive return to the political centre for the country, positioning Jetten to attempt the arduous process of forming a new majority coalition and offering a potential roadmap for other European centrists fighting off populist movements.
Others
China’s industrial profits surged 21.6% in September, the biggest jump since late 2023. Government efforts to curb price wars helped large firms lift profits to 3.2% for the year to date. High-tech manufacturers led the charge, with earnings soaring 26.8%.
The Russian stock market continued to plummet last week as Washington’s sanctions have frozen Moscow’s largest oil giants, Rosneft and Lukoil. Trump’s sanctions also ban American companies along with individuals to do any business with Russia’s two largest oil companies. Revenues from oil and gas accounts for around a quarter of Russia’s budget for their war in Ukraine. India and China have stopped purchasing oil from Russia amid Donald Trump’s sanctions. Investment banker Yevgeny Kogan said, “There’s no light at the end of the tunnel. The ‘peacemakers’ have achieved nothing, and the situation is close to a dead end”.
Argentina’s President Javier Milei’s party won a key midterm election, paving the way for free market reforms that have been a cornerstone of his leadership. His Freedom Advances party secured 41% of votes, leading in most provinces and finishing well ahead of the main opposition. Yesterday’s triumph will allow Milei to drive through his austerity agenda while boosting investor confidence in the country.
Stranger than fiction
A startup founded by new Nobel laureate Omar Yaghi plans to sell solar-powered “water-from-air” devices in 2026, able to make up to 1,000 litres a day without electricity. Using metal–organic frameworks to pull moisture from air, the California-based startup aims to supply drought-hit communities worldwide.
Fresh insights into the ecological devastation caused by onshore wind turbines around the world are contained in a shocking new paper published last month by a group of ecologists in Nature. An annual figure of around one million bats are killed in the countries with the highest number of turbines, but harmful effects are seen in many other parts of the ecosystem. The number of top predators such as jaguars, jungle cats and golden jackals can be changed by turbines in tropical forest gaps, leading to the “possibility for cascading effects” along similar latitudinal levels. In short, the science team notes that turbines can kill birds, bats and insects, change animal behaviour, physiology and demography and alter ecosystems. The installation of wind turbines invariably results in habitat degradation, but it is regions rich in biodiversity with minimal existing infrastructure that suffer the most. 500,000 bats are killed onshore in the US by wind turbines every single year. In the UK, 30,000 is the estimated annual kill number, with Canada at 50,000 and 200,000 in Germany. Many bird species are also at risk, with large raptors a conspicuous example.
The World Bank’s latest data shows a quiet global triumph with 93% of people aged 15 to 24 now able to read and write, up from 87% in 2000. In many regions, including East Asia, Latin America, and Central Europe, youth literacy has reached or neared universal levels, marking one of the most successful, least reported stories in development.
Quote
Jack Lew, attorney, diplomat, White House Chief of Staff from 2012 to 2013 and US Secretary of the Treasury from 2013 to 2017, “The budget is not just a collection of numbers, but an expression of our values and aspirations”
