US FX WRAP: Dollar marginally firmer, while GBP recovers some weakness after Reeves budget U-turn

Analysis details (20:33)

The Dollar Index was slightly firmer on Friday, but still ended lower on the week for the second consecutive time. Upside vs GBP, CHF, and EUR, offset marginal weakness against CAD. Domestic developments had little bearing on USD moves today as global news, particularly in the UK, was behind much of the intraday move. Nonetheless, more Fed speakers arrived, only bolstering the existing view that the FOMC find itself in a tricky position on December's policy decision. Money market pricing continued its hawkish run since Thursday, now pricing a 40% chance of a 25bps cut from ~ 68% earlier in the week. Schmid (2026 voter) and Logan (2026 voter) again highlighted inflation concerns that are not just about tariffs, with the latter needing to see convincing evidence of inflation coming down, or the labour market worsening, to support a December rate cut. Elsewhere, the US and Switzerland reached a deal on trade which sees the tariffs on Switzerland cut to 15% from 39% and in exchange, the Swiss will invest USD 200bln in the US. It is growing more apparent that the frustration amongst US consumers on higher prices is becoming a top priority in the Trump administration to regain support, as reports continue to suggest they are looking at lower tariffs on beef, tomatoes, coffee and bananas. 

Sterling dominated the headlines to end the week, as UK Chancellor Reeves yet again pulled a U-turn on the policies included in her upcoming November budget. Reports now show that the latest forecasts of improved current/expected future wage growth have lent Reeves a hand, which allows her to drop the income tax hike. Additionally, she is expected to extend the income tax threshold increase, allowing for additional headroom. Cable came off 1.3109 lows to around 1.3160, likely more of a dollar move. EUR/GBP was flat, again. Meanwhile, gilts settled over a point lower near lows, ahead of what's probably to be a volatile few weeks in the UK landscape.

CHF ended its recent rally as the US and Switzerland formalised their trade deal, likely allowing traders to take profits driven by trade optimism and the recent risk off in a typical sell-the-news trade. EUR/CHF sits just above 0.9200. JPY also lagged amid the improved sentiment surrounding global equities, while AUD/NZD extended on its rapid decline from Thursday's highs, as NZD takes preference. AUD/NZD heads into the weekend at around 1.1501 from Thursday's highs of 1.1637, with the antipodean cross paring some of the recent rally. 

TWD: The US and Taiwan reached an agreement on exchange rate policies that swiftly favoured TWD, resulting in USD/TWD trading lower at ~30.76 from 31.17 pre-announcement. Both sides are committed to avoiding intervention except when combating excess volatility and disorderly movements in exchange rates.

14 Nov 2025 - 20:33- ForexUS Research- Source: Newsquawk