Sterling drifted higher through the week, resisting pressure from slowing economic momentum and the uneasy calm ahead of the Chancellor’s autumn budget.
Recent figures from the UK’s private sector revealed business activity at its weakest level in five months, a sign that corporate caution is deepening as fiscal policy takes centre stage. Both firms and households appear to be holding back on larger commitments, wary of the budget’s potential implications for taxation and spending.
Governor Andrew Bailey’s latest remarks echoed that restraint. The suggestion that policy would remain on hold at the November meeting was widely expected, but investors took note of the emphasis on persistent price pressures. Rate cuts, once anticipated before year-end, now seem less certain, keeping Sterling supported even as growth indicators soften.
Across the Atlantic, the US dollar has held its ground despite the political turbulence surrounding Washington’s partial government shutdown, now stretching into its second week. The impasse has disrupted key economic releases, including nonfarm payrolls, depriving markets of their most reliable signal on labour health.
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