The British Pound just can’t catch a break. GBP/USD hangs around 1.3150, marking its third sluggish day in a row. Traders aren’t exactly jumping for joy after Chancellor Rachel Reeves dropped the income-tax hike plans. The Office for Budget Responsibility did cut its deficit forecast—from £35 billion down to £20 billion—but investors aren’t impressed. There’s a lot of talk now about the UK’s long-term financial health. Instead of bold tax increases, the government seems set to tinker with thresholds and salary-sacrifice rules. People aren’t convinced that’s enough.
Soft UK Data Fuels Talk of BoE Rate Cut
Recent UK numbers aren’t helping the Pound’s case. GDP barely grew in Q3, and September actually shrank. That’s made traders almost certain the Bank of England will cut rates in December. Markets are waiting for this week’s inflation and PMI data, hoping for signs of life from UK manufacturing and services, but right now the mood is cautious.
US Dollar Holds Up as Markets Wait for Data
Meanwhile, the US Dollar stays solid. Markets are waiting for a batch of delayed economic data after the US government reopened. Fewer traders now expect the Fed to cut rates in December, which helps the Dollar. But then Fed Governor Christopher Waller hinted a December rate cut could still happen, injecting a bit of uncertainty. Unless UK data manages to surprise everyone, GBP/USD looks set to stay under pressure.
