The mood around the Pound has been anything but settled, as a complex set of forces brings fiscal credibility and slowing growth sharply into view. The recent rebound from early September lows reflects more than currency repositioning, it highlights how investors are beginning to reprice the UK’s risk profile at a moment when policy choices carry unusual weight.
Sterling’s lift from one-month troughs comes against a backdrop of gilt yields rising to levels not seen since the late 1990s, a signal of markets pressing hard on fiscal expectations. With volatility in long-dated debt no longer a uniquely British issue but increasingly global in character, the UK finds itself in the spotlight because the stakes for its next policy steps feel unusually high. Attention now falls squarely on Chancellor Rachel Reeves, who must present a November budget that convinces investors the country can balance slowing momentum with credible fiscal management. Without that, the pressure from bond markets will only intensify.
Fresh data from the Office for National Statistics confirmed that the UK economy flatlined in July, a slowdown from the 0.4% expansion posted in June. The currency’s weakness against both the euro and the dollar following the release reflects how quickly investors are recalibrating their expectations. These growth figures, modest as they may appear, are critical because they directly shape how Reeves can bridge fiscal gaps, and whether additional tax measures may need to be introduced to stabilise projections.
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