Pound Sterling Dips vs Euro and Dollar as December BoE Cut Looks Likely

Modified: Tuesday, 11 November 2025 10:07 BST - Written by Ben Hughes

STORY LINK Pound Sterling Dips vs Euro and Dollar as December BoE Cut Looks Likely

The Pound Sterling fell against the Euro and US Dollar on Tuesday after the latest UK employment data showed the jobless rate rising to 5%, the highest since 2021, reinforcing expectations that the Bank of England could cut rates again before year-end.

Sterling slipped around 0.4%, with EUR/GBP climbing back to 0.88 and GBP/USD falling by a similar margin as traders priced in a higher chance of monetary easing at the December meeting.

UK Unemployment Inches Higher

Britain’s labour market weakened further heading into the final quarter, with the Office for National Statistics (ONS) reporting that unemployment rose to 5.0% in the three months to September, up from 4.8% in the prior quarter.

That took the number of jobseekers to roughly 1.8 million, exceeding market forecasts for a smaller rise to 4.9% and underscoring growing strain on households and businesses alike.

At the same time, wage pressures eased slightly — a key development for policymakers. Regular pay growth (excluding bonuses) slowed to 4.6%, down from 4.7%, while total pay growth including bonuses edged lower to 4.8%.

Persistent wage growth had been one of the Bank of England’s main hurdles to further cuts, but this latest moderation “throws the door wide open to a December move,” according to Thomas Pugh, chief economist at RSM UK.

“A rise in the unemployment rate to 5.0%, the highest level since the pandemic, and a further slowing in private sector pay growth throws the door wide open to a December rate cut – as long as the budget is as deflationary as the Chancellor hinted at last week,” he said.

The figures come just weeks before Chancellor Rachel Reeves unveils her first Autumn Budget on 26 November, and the combination of weak labour data and fiscal tightening could give the BoE the final justification to ease policy again.

Analysts at ING agreed, noting that both inflation and jobs indicators are now turning lower:

“Both inflation and jobs data are starting to point down, and we think the Autumn Budget’s tax hikes will provide the final argument for a cut in December.”

That makes the upcoming Budget a key event for sterling, as it could shape the UK’s growth trajectory and ultimately determine whether the BoE moves next month.

US Government Reopening Fails to Move the Dollar

Across the Atlantic, the US dollar held steady despite broad gains in risk assets after weekend progress toward ending the US government shutdown.

Equities and commodities rallied, but the dollar struggled for direction as traders weighed optimism about the reopening against uncertainty over delayed US data releases.

The Bureau of Labor Statistics (BLS) has yet to publish its missing September and October jobs reports, and the market expects both to show labour market weakness — which could boost the odds of a Federal Reserve rate cut in December.

Senator Elizabeth Warren renewed calls last week for the administration to release the prepared data, writing on X:

“Trump’s shutdown leaves us in the dark about our economy – release the prepared September data now.”

For now, the US dollar has drifted lower since last week’s reversal from major resistance near its 200-day moving average, with traders wary that the long-delayed data dump could trigger renewed volatility.

Outlook for Sterling

The combination of rising UK unemployment, slower wage growth, and looming fiscal tightening paints a cautious picture for the pound. While sterling remains resilient above key technical levels, the momentum clearly favours further downside into December.

For those planning foreign currency transfers, sterling’s weakness and the growing chance of a BoE rate cut may offer a timely window to secure stronger exchange rates before further declines — compare live rates and request a quote today.n it reversed from chart resistance at the 200sma.

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TAGS: Pound Sterling Forecasts