Pound stabilizes after last week’s market swings
Sterling steadied on Monday after last week’s sharp fluctuations, trading slightly stronger against the euro and holding steady versus the dollar. The pound remains well above recent lows following Friday’s turbulence, which saw its weakest level against the euro since early 2023.
Market jitters last week were triggered by reports that UK Finance Minister Rachel Reeves has no plans to raise income tax rates, disappointing investors who expected the increase to cover a projected fiscal gap. The news weighed on British government bonds and pressured the pound, News.Az reports, citing Reuters.
Monday’s calmer session saw British bond yields lower and outperforming European peers. The pound rose slightly against the euro to 88.1 pence, while holding at $1.3166 against the dollar. Analysts, however, caution that the calm may be temporary as politics and economic data loom.
“With consumer inflation data due Wednesday, a soft CPI reading could open the door to a December rate cut,” said Kit Juckes, chief FX strategist at Societe Generale. The Bank of England left rates unchanged this month, though four of nine policymakers voted for a cut, and markets currently price in a roughly 75% chance of a rate reduction at the December meeting.
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