Sterling Falls as UK Budget Deficit Balloons

2025-09-19 07:29 By Agna Gabriel 1 min. read

The British pound fell to $1.35, the lowest in two weeks, after UK borrowing data sharply missed expectations.

Public sector net borrowing hit £18 billion in August, the highest for the month in five years and well above forecasts of £12.7 billion.

Borrowing in the first five months of the fiscal year reached £83.8 billion, £11.4 billion above the OBR’s March forecast, with prior months revised higher by £5.9 billion.

The figures add pressure ahead of the autumn budget and come amid global concerns over sovereign debt, which recently pushed 30-year gilt yields to record highs.

Meanwhile, the BoE held rates at 4% in a 7–2 vote, slowed QT to £70 billion, and reiterated its cautious stance.

Traders modestly extended long-term easing bets.

In the US, the Fed cut rates by 25 bps and signaled 50 bps more this year, though Powell stressed it was not the start of a full easing cycle.



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