The British pound is trading near a two-week low against the dollar, around $1.35, as investors brace for upcoming economic data and central bank commentary. Lingering concerns over the UK’s fiscal health, stemming from unexpectedly high public sector borrowing, add to the downward pressure. The Bank of England’s recent decision to hold interest rates steady and maintain a cautious policy outlook further contributes to the current market sentiment.
- The British pound traded around $1.35, near Friday’s two-week low of $1.346.
- Investors are awaiting the S&P Global flash PMI survey and remarks from Bank of England and Federal Reserve officials.
- Concerns remain over the UK’s fiscal outlook.
- Public sector net borrowing surged to nearly £18 billion in August, exceeding market expectations of £12.5 billion.
- Rising global debt concerns recently drove 30-year gilt yields to record highs.
- The BoE left interest rates unchanged at 4% in a 7–2 vote.
- The pace of quantitative tightening slowed to £70 billion.
- Markets currently expect the next rate cut only in 2026.
The current environment presents challenges for the British pound. High government borrowing, coupled with global debt concerns, restricts the government’s ability to implement additional spending measures. The central bank’s reluctance to cut interest rates in the near term further limits potential upside for the currency. These factors suggest the pound may remain under pressure in the short term, potentially facing headwinds from both fiscal and monetary policy.