Sterling Near Two-Week Low as Markets Assess UK Budget
The British pound remained below $1.33, trading near a two-week low as investors assessed UK Chancellor John Healey’s first budget announcement. Healey reaffirmed his commitment to the government’s fiscal rules, with the Office for Budget Responsibility estimating fiscal headroom at £15 billion for the 2029—30 fiscal year, in line with expectations. Key measures include energy bill relief, higher-than-expected-to-be-lower bank taxes, tariff suspensions on more than 100 supermarket products and a 3.9% increase in minimum wages. The budget also includes an additional £20.4 billion for the National Wealth Fund and British Business Bank to support investment and 140,000 jobs. On the economic outlook, the OBR cut its 2027 GDP growth forecast to 1% from 1.6%, citing the impact of the Iran war on energy prices, while raising its 2026 projection to 1.2% from 1.1%. Borrowing and public debt forecasts were also revised higher, weighing on the fiscal outlook.
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The British pound remained below $1.33, trading near a two-week low as investors assessed UK Chancellor John Healey’s first budget announcement. Healey reaffirmed his commitment to the government’s fiscal rules, with the Office for Budget Responsibility estimating fiscal headroom at £15 billion for the 2029—30 fiscal year, in line with expectations. Key measures include energy bill relief, higher-than-expected-to-be-lower bank taxes, tariff suspensions on more than 100 supermarket products and a 3.9% increase in minimum wages. The budget also includes an additional £20.4 billion for the National Wealth Fund and British Business Bank to support investment and 140,000 jobs.
On the economic outlook, the OBR cut its 2027 GDP growth forecast to 1% from 1.6%, citing the impact of the Iran war on energy prices, while raising its 2026 projection to 1.2% from 1.1%. Borrowing and public debt forecasts were also revised higher, weighing on the fiscal outlook.