Sterling Falls on Budget Uncertainty

2025-11-14 09:53 By Agna Gabriel 1 min. read

The British pound weakened to around $1.316 as investors grew concerned about the country’s fiscal sustainability after reports that Chancellor Rachel Reeves is dropping plans to raise income tax.

The move follows improved forecasts from the Office for Budget Responsibility, which cut the expected fiscal shortfall from roughly £35 billion to around £20 billion.

Reeves is not expected to break Labour’s pledge on headline income-tax rates, instead likely using threshold adjustments and changes to salary-sacrifice programs to raise revenue.

The budget, due on November 26, faces cabinet debate over policies including exit taxes and limited liability partnerships.

Markets pared bets on Bank of England rate cuts, with about 75% probability for a December move, but rising gilt yields continue to complicate the UK’s fiscal outlook and weigh on the pound ahead of the announcement.



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