The British Pound is trading just below $1.31 as markets anticipate the UK’s upcoming budget announcement. Uncertainty surrounds potential fiscal adjustments necessary to meet government targets, with reports of avoiding tax hikes creating temporary market ripples. Weaker economic data and expectations of interest rate cuts by the Bank of England add further complexity.
- The British pound is hovering just below $1.31.
- The UK’s Nov. 26 budget is anticipated.
- Finance minister Rachel Reeves is expected to find tens of billions of pounds to meet her fiscal rules.
- The OBR will reportedly cut growth forecasts for 2026 and beyond.
- Borrowing is at a record high outside the pandemic.
- Business activity has stalled.
- Retail sales fell sharply.
- Consumer sentiment weakened.
- Inflation eased to 3.6% in October.
- Markets now see an 80% chance of a 25-bp cut in December.
The combined effect of potentially revised growth forecasts, weakened economic data and expectations for lower interest rates suggest a challenging outlook for the British pound. The upcoming budget announcement will be critical in shaping market sentiment and determining the pound’s trajectory in the short to medium term, as markets will likely closely scrutinize any announced policy changes.