Sterling holds steady against Euro despite UK borrowing surge
The British pound was steady against the euro on Tuesday, even as data showed the UK’s government borrowing in the first half of the financial year was the highest since the pandemic. Analysts said investors have already priced in expectations of a tough budget next month.
Sterling traded little changed at 86.80 pence per euro, while it dipped 0.09% to $1.3393 against a stronger dollar after briefly hitting a six-day low, News.Az reports, citing Reuters.
Government borrowing between April and September reached £99.8 billion ($133.9 billion) — up 13% from a year earlier and £7.2 billion above official forecasts. In September alone, borrowing stood at £20.2 billion, slightly below expectations from a Reuters poll.
The overshoot increases pressure on Finance Minister Rachel Reeves, who is preparing her November 26 budget. Reeves has indicated plans to raise taxes and cut spending to meet fiscal targets and reassure markets.
“The UK government is in an unenviable position … the market’s already pricing in tax rises,” said Guy Miller, Chief Market Strategist at Zurich Insurance Group.
Reeves has said she wants to build a fiscal buffer to weather volatile markets, though doing so would require “tough trade-offs.”
Investors are also awaiting September inflation data, expected to show consumer prices rising to 4% from 3.8% in August.
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