Sterling Falls as UK Scraps Tax Hikes

2025-11-14 02:34 By Joshua Ferrer 1 min. read

The British pound weakened to around $1.31, near a seven-month low following reports that the government abandoned plans to raise income-tax rates ahead of the November 26 budget.

Prime Minister Keir Starmer and Chancellor Rachel Reeves scrapped earlier proposals to hike basic and higher tax bands, opting instead for less-direct revenue measures amid a £30 billion fiscal gap, FT reported.

The major U-turn raised concerns over fiscal discipline and political stability, prompting investors to pull back from sterling-linked assets and adding pressure on UK debt.

The currency was further weighed down by weaker-than-expected economic data, as the GDP grew only modestly in Q3, while September GDP contracted month-on-month.

The disappointing figures have fueled expectations of a Bank of England rate cut next month, following earlier data showing the jobless rate at a four-year high and pay growth slowing to its weakest since early 2022.



News Stream
Sterling Eases to 7-Month Low
The British pound weakened below $1.32, nearing its lowest level in seven months, as investors balanced easing political uncertainty with weaker UK economic data. Investors welcomed signs that a prolonged Labour leadership contest was becoming less likely after Keir Starmer announced his resignation. Andy Burnham is now seen as the leading candidate to replace him, with backing from former health secretary Wes Streeting reducing the risk of a drawn-out leadership battle. On the economic front, June flash PMI data showed a weaker picture, with the composite index falling to a 14-month low of 49.4, below expectations and signalling a second consecutive month of contraction. Rising input costs and accelerating services inflation continue to complicate the Bank of England’s policy outlook.
2026-06-24
Sterling Edges Down, Holds Firmly Above $1.32
The British pound weakened against a firmer US dollar but remained comfortably above $1.32 as investors balanced easing political uncertainty with weaker UK economic data. Sterling gave back some of the previous session’s gains as the dollar regained ground and broader market sentiment softened. Investors welcomed signs that a prolonged Labour leadership contest was becoming less likely after Keir Starmer announced his resignation. Andy Burnham is now seen as the leading candidate to replace him, with backing from former health secretary Wes Streeting reducing the risk of a drawn-out leadership battle. On the economic front, June flash PMI data showed a weaker picture, with the composite index falling to a 14-month low of 49.4, below expectations and signalling a second consecutive month of contraction. Rising input costs and accelerating services inflation continue to complicate the Bank of England’s policy outlook.
2026-06-23
Sterling Rebounds After Starmer's Resignation
The British pound rebounded toward $1.33 after falling to its lowest level since March earlier in the session, as markets reacted to Prime Minister Keir Starmer's resignation, paving the way for a change in the UK's leadership. The resignation follows Greater Manchester Mayor Andy Burnham's by-election victory last week, which enabled his return to Parliament. Burnham subsequently announced his intention to seek the premiership. Prospects for a smooth leadership transition improved after Wes Streeting, previously viewed as a potential challenger, declared his support for Burnham's candidacy. Investors are now focused on the implications for the UK's fiscal outlook, seeking greater clarity on Burnham's fiscal policy agenda, with few concrete details available so far. A key concern remains the possibility of increased gilt issuance to finance higher public spending, which could further strain the UK's already fragile public finances and elevated debt burden.
2026-06-22