The Pound’s fall has continued from yesterday after Chancellor Rachel Reeves surprised investors with an unplanned tax announcement. She confirmed that the government will raise income taxes, breaking one of Labour’s key promises from last year’s election. Reeves said, “new global challenges” had forced the government to act and that the change is “vital for the UK economy.” Investors and the markets haven’t digested it well, with concerns growing that higher taxes could slow down spending and growth just as the economy is already under pressure.
As a result, GBP/EUR fell to its lowest level since May 2023. The news has made investors more cautious on Sterling ahead of the Bank of England’s meeting tomorrow, where any small change in language could move the market sharply.
Elsewhere, safe-haven currencies such as the U.S. Dollar, Swiss Franc, and Japanese Yen stayed strong. These currencies tend to rise when markets are nervous, as investors move their money to safer assets. The Dollar held steady after reaching its highest level since April, while the Franc and Yen gained overnight as global stock markets — especially tech — continued to fall.
The Australian Dollar recovered slightly after falling earlier in the week, while the New Zealand Dollar stayed weak after unemployment rose to its highest level since 2016. When joblessness increases, central banks often cut rates to help the economy, which can make the currency less attractive to hold.
Today’s focus is on services PMI data from the UK and Eurozone. PMI (Purchasing Managers’ Index) measures how active businesses are. Readings above 50 show growth, while below 50 means contraction. Both regions are expected to stay above 50, showing that their service sectors are still expanding — a positive sign for their economies.
We’ll also get the U.S. ADP employment report, which tracks private-sector job creation and often hints at how Friday’s main jobs data might look. It’s expected to rise from –32,000 to +25,000, showing some recovery in hiring. Still, with the U.S. government shutdown continuing, the market impact may be limited.
For now, the Pound remains under pressure, the Dollar is steady, and investors are watching closely for tomorrow’s Bank of England update, which could quickly shift sentiment in GBP pairs.
GBP/EUR 1.1337 GBP/USD 1.3017 GBP/AED 4.7850
GBP/AUD 2.0096 GBP/CHF 1.0560 GBP/CAD 1.8402
GBP/NZD 2.3071 EUR/USD 1.1466 GBP/ZAR 22.7981