Pound Weakens Ahead of UK Budget
The British pound weakened further to $1.332 in the final week of October, retreating from more than one-month highs as renewed concerns over a prolonged conflict in the Middle East boosted demand for the US dollar. Investors also adopted a cautious stance ahead of Wednesday’s UK budget announcement. Investors also remained cautious ahead of Wednesday’s UK Budget, where Chancellor John Healey is expected to raise the national living wage by around 4% and consider measures to ease businesses’ electricity costs. According to the Financial Times, the government plans also to provide an additional £20.4 billion to the National Wealth Fund and British Business Bank through increased borrowing, although borrowing is not expected to begin until 2028—29, limiting immediate concerns for bond markets. Meanwhile, UK shop price inflation accelerated to 2.1% year-on-year in October, its highest level since February 2024 and above expectations of 1.6%.
The British pound weakened further to $1.332 in the final week of October, retreating from more than one-month highs as renewed concerns over a prolonged conflict in the Middle East boosted demand for the US dollar. Investors also adopted a cautious stance ahead of Wednesday’s UK budget announcement. Investors also remained cautious ahead of Wednesday’s UK Budget, where Chancellor John Healey is expected to raise the national living wage by around 4% and consider measures to ease businesses’ electricity costs.
According to the Financial Times, the government plans also to provide an additional £20.4 billion to the National Wealth Fund and British Business Bank through increased borrowing, although borrowing is not expected to begin until 2028—29, limiting immediate concerns for bond markets. Meanwhile, UK shop price inflation accelerated to 2.1% year-on-year in October, its highest level since February 2024 and above expectations of 1.6%.