Euro Holds Firm As US Shutdown Hopes Lift Sentiment

Euro Holds Firm As US Shutdown Hopes Lift Sentiment

Wednesday 12th November 2025 – 09:09 (GMT)

The euro reached its highest level since late October against both USD and GBP as investors bet that a resolution to the US government shutdown may soon emerge and await fresh policy signals from central bank officials on both sides of the Atlantic.

The European Central Bank is widely expected to maintain interest rates at their current levels for an extended period, supported by a resilient eurozone economy and inflation hovering close to target. Money markets are pricing in only a 40% likelihood of a rate cut by September 2026.

ECB vice-president Luis de Guindos said in an interview on Monday that policy settings remain “appropriate,” emphasising that the central bank must stay “very prudent and cautious” despite a gradual easing of uncertainty over the past six months, helped by a recent US–EU trade agreement.

Conversely in the US & UK, a string of weak economic data has fuelled renewed expectations that the Federal Reserve and Bank of England could lower rates as soon as December. Recent figures showed job losses in October, consumer sentiment plunging to its second-lowest level on record and layoffs hitting a two-decade high – all pointing to a cooling labour market and mounting pressure on policymakers.