Sterling on the 'back foot' amid 'budget jitters'
|The total absence of tier-1 economic data releases out of the UK this week means that focus is almost exclusively on next month’s budget. Chancellor Reeves is now the latest senior Labour MP to be embroiled in a scandal after the news broke that she was renting a property of hers without the appropriate license.
While this has somewhat overshadowed lingering fears over the details of the Autumn Budget itself, it is not exactly ideal preparation for what may end up being a make-or-break budget for not just the chancellor, but the Labour Party, which continues to lag well behind Reform in the latest polls.
A combination of budget jitters and rising bets in favour of a December rate cut from the Bank of England have kept sterling firmly on the back foot so far this week, with the pound slumping towards the 1.31 level on the dollar yesterday, and to its lowest level on the euro since May 2023.
Swap markets see around a 2-in-3 chance that the MPC lower rates again before year-end, but that could rise should sizable tax hikes dampen the outlook for UK growth.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.