Sterling enjoying a 'happy hump day'

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waterman

Written by Dan Waterman
October 1st 2025
GBP starts the new month and quarter on the front-foot, but no-one seems to know why..

The Pound is surprisingly up by 0.3% on the day versus both the Euro & US Dollar and achieves a 1-week high whilst doing so.

The FX market has been extremely quiet since Friday, which is rather unheard of seeing a new quarter has begun (traders placing new positions). Maybe many were waiting for the comments out of the Labour conference and maybe many were 'impressed' with what they heard, which has seen GBP increase in value?

Over the pond, the US government has shutdown for the first time since 2018 due to reaching an impasse on health care funding. 

This is big news and it has affected financial markets somewhat today, but the USD has hardly moved (yet). The longer it continues though, the worse things will get for US stocks, bonds and the Dollar.

UK business confidence in September fell to its lowest level on record, amidst heightened uncertainty ahead of the Autumn budget. Investment and confidence figures are key drivers of economic growth and so these findings paint a subdued picture ahead for the UK (nothing new there). 
 
For the 10th year in a row, the Chinese Yuan has gained market share in terms of being one of the worlds most traded currencies. Chinese officials have been trying to boost the currency's global appeal, in a bid to chip away at the dominance of the US Dollar and firm up a safe-haven status. 

The Pound (which currently sits in 4th place) has seen the biggest fall in recent years and is now under threat from the Yuan. 89% of the volume traded currencies each day involve the USD..