Updated: December 14, 2025
GBP/USD and EUR/USD rose last week as the dollar softened after a Fed rate cut. Here’s what moved the pound, euro and USD — and what could drive prices in the week ahead.
Sterling and the euro ended the week firmer against the US dollar, extending a December upswing as markets digested the Federal Reserve’s latest quarter-point rate cut and a run of weaker US data. But while GBP/USD advanced modestly, the pound lost ground against the euro, reflecting a softer UK growth picture and a market that is increasingly confident the Bank of England will cut rates at its next meeting.
With the ECB and the BoE both due on Thursday, December 18, and shutdown-delayed US jobs, retail sales and CPI data set to land, the week ahead is shaping up as one of the most consequential for GBP, EUR and USD pricinginto year-end.
Last week’s prices in focus: GBP/USD, EUR/USD and GBP/EUR (week of Dec 8–14, 2025)
Because FX trading is thin over weekends, “last week” in market terms largely refers to Monday, Dec 8 through Friday, Dec 12 (with limited movement recorded on Dec 13–14).
Where the majors traded
- GBP/USD (Pound to Dollar):
Opened the week around 1.3325 and closed Friday near 1.3373, after trading roughly 1.3288–1.3434 during the week’s sessions.
Weekly change (approx.): +0.36%. - EUR/USD (Euro to Dollar):
Opened near 1.1640 and ended Friday around 1.1743.
FXStreet noted EUR/USD reached about 1.1762 during the week, finishing only a handful of pips below that level.
Weekly change (approx., using closes): +0.88%. - GBP/EUR (Pound to Euro):
The pound started near 1.1448 and ended Friday around 1.1388, implying euro strength versus sterling through the week.
Weekly change (approx.): -0.52%.
What that means in plain terms: the US dollar weakened broadly, lifting both GBP/USD and EUR/USD, but the euro outperformed sterling on the week.
What moved USD last week: Fed cut + “late” US data + fragile confidence in the dollar
The clearest driver of last week’s FX move was the Federal Reserve’s quarter-point cut, delivered midweek, which pushed the dollar lower as traders weighed how much additional easing may still be ahead.
At the same time, markets were working through a messy US macro backdrop. Reuters flagged that the dollar slide was reinforced by weaker US figures (including jobless claims) and shifting expectations around the Fed’s path, while also noting Fed liquidity operations that added to the broader “dollar down” narrative. Reuters
ING’s strategy team summed up the bigger picture: the DXY dollar index is ending the year down roughly 9%, with investors surprised by the resilience of US trading partners and fading US “exceptionalism,” and with seasonal forces potentially keeping the dollar soft into year-end. ING Think
Why it matters for GBP/USD and EUR/USD:
When markets price a lower US rate outlook, the dollar typically loses some of its yield advantage — and the currencies most sensitive to global rate spreads (like EUR and GBP) often benefit.
What moved GBP last week: UK growth disappointment and rising confidence in a BoE cut
Sterling began the week cautiously as traders braced for “an action-packed week” that included the Fed decision and UK data, with Reuters noting the pound had recently climbed to multi-week highs helped by improving sentiment after the UK budget and by expectations for a softer dollar. Reuters
But by the end of the week, the UK macro picture looked shakier.
Reuters reported the UK economy contracted 0.1% month-on-month in October, and that output fell 0.1% across August–October, a backdrop that left the pound softer against the euro even as it held up against the dollar.
Meanwhile, the rate story has become increasingly one-sided:
- A Reuters poll found all economists surveyed expected the BoE to cut by 25 bps to 3.75% on December 18, with many anticipating additional cuts into early 2026.
- Reuters also reported that money markets were already heavily leaning toward a December BoE cut earlier in the week.
ING echoed that view, saying it expects sterling to “come a little lower again” if the BoE cuts on 18 December, describing Governor Andrew Bailey as the key swing vote. ING Think
Bottom line for GBP: last week reinforced the idea that sterling’s direction into year-end may depend less on UK “good news” and more on whether the BoE turns more decisively dovish — especially versus a euro that has its own support.
What moved EUR last week: “Good place” ECB messaging, resilient growth — and a strong-euro debate
The euro’s week wasn’t only about a weaker dollar. It also reflected a growing conviction that the ECB is in no hurry to move again — and that the eurozone economy has been sturdier than many feared.
Reuters reported ECB President Christine Lagarde said the eurozone economy has been resilient to trade tensions and is growing close to potential, adding that the ECB may upgrade growth projections at its December meeting — while reiterating policy is in a “good place.” Reuters
A Reuters economist poll supported that market stance: all 96 economists surveyed expected the ECB to hold the deposit rate at 2% at the December meeting, with most seeing rates staying unchanged well into 2026.
But the euro’s strength is also becoming part of the policy conversation. In a Reuters analysis, the euro was described as having “hidden strength,” with the currency up nearly 13% this year and supported on a trade-weighted basis, raising questions about whether euro appreciation could eventually become disinflationary enough to revive the case for cuts. Reuters+1
Why this matters for EUR/USD:
If the ECB sticks with “good place” guidance and growth optimism while the Fed is already cutting, the rate-spread narrative can keep EUR/USD supported — unless US data surprises to the upside or the ECB pushes back hard on market pricing.
The week ahead: key catalysts for Pound, Dollar and Euro prices (Dec 15–19, 2025)
Next week’s FX calendar is packed — and unusually sensitive — because of central bank decisions and delayed US data releases.
1) Shutdown-delayed US data: jobs, retail sales and CPI
Reuters’ Take Five preview highlighted that the shutdown-delayed US jobs report for November is due Tuesday, alongside delayed retail sales, with US CPI expected Thursday — all closely watched after the Fed’s latest cut.
Investing.com’s week-ahead calendar similarly lists a US jobs report (Nov) on Tuesday and US CPI (Nov) on Thursday, placing them among the week’s biggest global risk events.
FX significance: strong inflation or jobs data can quickly trigger a “higher-for-longer” repricing in US yields — often a direct tailwind for the dollar.
2) ECB decision (Thursday, Dec 18)
The ECB Governing Council’s monetary policy meeting runs Dec 17–18, with a press conference on the 18th.
Reuters expects the ECB to hold at 2% again, but warns that markets are now unusually sensitive to the messaging after investors began flirting with the idea of an ECB hike as a tail risk in 2026.
3) Bank of England decision (Thursday, Dec 18)
The BoE decision lands the same day — and markets are heavily primed for a cut. Reuters’ poll consensus is a 25 bps cut to 3.75%.
Investing.com adds that money markets have priced a high probability of that move and highlights the importance of the vote split and Governor Bailey’s stance.
Forecasts and scenarios: where analysts see GBP/USD and EUR/USD heading next
Forecasting FX is always probabilistic — especially around major central bank events — but last week’s research and week-ahead previews set out several clear scenarios.
GBP/USD forecast: modest upside capped by BoE risk
Technical levels to watch: FXStreet highlighted resistance near 1.3438 (the December top), with support around 1.3271and additional downside markers below that.
Macro scenario that could lift GBP/USD:
- US data weakens further, keeping the Fed easing narrative intact.
- BoE cuts but signals caution on the pace of further easing.
Macro scenario that could hurt GBP/USD:
- BoE cuts and sounds more dovish than markets expect (or signals more cuts sooner), while US CPI/jobs surprises firmer.
ING’s base case is not a straight-line trend but a range: it expects GBP/USD to stay broadly within a 1.31–1.37 band, and explicitly sees sterling a bit softer if the BoE cuts on Dec 18.
EUR/USD forecast: supported by spreads, but vulnerable to a “US data bounce”
FXStreet said EUR/USD’s rally to around 1.1762 was driven primarily by US dollar weakness following poor data and the Fed decision.
ING’s tactical view was more cautious into the new week: after EUR/USD touched around 1.175, it expects a slight correction toward the middle of the 1.170–1.175 range as the dollar stabilises and markets digest Fed signals.
MUFG, however, highlighted a longer-horizon euro-positive theme, forecasting a further 5–6% appreciation of EUR versus USD next year (on top of 2025’s gain), while arguing that euro strength itself could keep risks tilted toward ECB easing rather than tightening.
GBP/EUR (and EUR/GBP): the cross may hinge on “who cuts and how”
Last week’s price action already hinted at the pressure point: GBP/EUR drifted lower as UK growth disappointed and euro support held.
ING’s strategy note on EUR/GBP argues downside looks limited and flags support demand around the 0.8700–0.8750zone, while also stressing that BoE cuts are a meaningful headwind for sterling.
What this means for readers tracking Pound, Dollar and Euro prices
If you’re watching FX for travel, online purchases, imports/exports, or business cash flow, next week is the kind of week where rates can move quickly — even without a “shock” headline. The market may react less to the decisions themselves (which are widely anticipated) and more to:
- Central bank tone (how “dovish” or “hawkish” the guidance sounds) Reuters+1
- Vote splits at the BoE and what they imply for the 2026 path
- US CPI and jobs prints that could revive or undermine the case for further Fed cuts
The takeaway
Last week’s pricing delivered a clear message: the dollar is on the defensive, while the euro remains well-supported by ECB “good place” messaging and resilient eurozone growth signals, and the pound is increasingly at the mercy of a likely BoE cut.
The week ahead now brings a high-stakes test of that narrative — with ECB and BoE decisions on Dec 18 and shutdown-delayed US jobs and inflation data that could still swing USD sentiment into year-end.
Market note: Exchange rates are volatile and can change rapidly. This article is informational and not investment advice.
