Sterling Under Pressure as UK Deficit Widens
Sterling weakened to $1.336, near its lowest level since late July, as investors assessed the latest developments in the Middle East alongside weaker-than-expected UK public finances. The US dollar remained supported by expectations of further interest-rate hikes from the Federal Reserve. Brent crude resumed its recent decline after reports that Iran had proposed reopening the Strait of Hormuz within seven days if Washington agrees to demands including lifting its military blockade of Iranian ports. Meanwhile, UK government data showed the budget deficit widened to £18.3 billion in August, above the £15.5 billion forecast, partly reflecting higher inflation-linked spending on pensions and benefits. Attention is now turning to next month’s Autumn Budget, with the government reportedly considering changes to its fiscal rules that would allow borrowing for infrastructure projects to be excluded.
336, near its lowest level since late July, as investors assessed the latest developments in the Middle East alongside weaker-than-expected UK public finances. The US dollar remained supported by expectations of further interest-rate hikes from the Federal Reserve. Brent crude resumed its recent decline after reports that Iran had proposed reopening the Strait of Hormuz within seven days if Washington agrees to demands including lifting its military blockade of Iranian ports. 5 billion forecast, partly reflecting higher inflation-linked spending on pensions and benefits.
Attention is now turning to next month’s Autumn Budget, with the government reportedly considering changes to its fiscal rules that would allow borrowing for infrastructure projects to be excluded.