Pound Gains on Rate Hike Bets

2026-10-30 11:24 By Joana Ferreira 1 min. read

The pound climbed above $1.34, reaching its highest level since mid-September and gaining around 1% this month.

This marks its first monthly advance since August, supported by the government’s budget and growing expectations of a Bank of England rate hike in November.

Chancellor John Healey delivered his first budget on Wednesday, with spending plans largely meeting expectations and offering few surprises for markets.

He said the government would use part of its fiscal headroom, now reduced to £15 billion from £24 billion, to meet its main fiscal target while continuing efforts to restore public finances amid the economic fallout from the Iran conflict.

Money markets are almost fully pricing in a BoE rate hike on November 5, followed by further increases in February and July, with a 50% chance of another by December 2027, as persistent inflation above target, rising bond yields and stronger-than-expected economic data have reinforced expectations of tighter policy.



News Stream
Pound Gains on Rate Hike Bets
The pound climbed above $1.34, reaching its highest level since mid-September and gaining around 1% this month. This marks its first monthly advance since August, supported by the government’s budget and growing expectations of a Bank of England rate hike in November. Chancellor John Healey delivered his first budget on Wednesday, with spending plans largely meeting expectations and offering few surprises for markets. He said the government would use part of its fiscal headroom, now reduced to £15 billion from £24 billion, to meet its main fiscal target while continuing efforts to restore public finances amid the economic fallout from the Iran conflict. Money markets are almost fully pricing in a BoE rate hike on November 5, followed by further increases in February and July, with a 50% chance of another by December 2027, as persistent inflation above target, rising bond yields and stronger-than-expected economic data have reinforced expectations of tighter policy.
2026-10-30
Pound Holds Above $1.33 Following UK Budget
The British pound remained above $1.33 a day after Finance Minister John Healey unveiled a cautious budget featuring tax and spending measures designed to support households facing what he described as “global economic storms.” Healey reaffirmed the government’s commitment to its fiscal rules, announcing tax increases on banks, gambling, savings, and landlords, alongside tighter VAT rules for online marketplaces and measures to cushion households from rising energy bills. He also said the government would use part of its fiscal buffer, now reduced to £15 billion from a previous estimate of £24 billion, to meet its main fiscal target while maintaining efforts to repair public finances despite the economic fallout from the Iran conflict. The budget did little to shift market expectations for the Bank of England’s policy meeting next week. Money markets are fully pricing in a rate hike on November 5, with a second increase also expected by February.
2026-10-29
Sterling Near Two-Week Low as Markets Assess UK Budget
The British pound remained around $1.33, trading near a two-week low as investors assessed UK Chancellor John Healey’s first budget announcement. Healey reaffirmed his commitment to the government’s fiscal rules, with the Office for Budget Responsibility estimating fiscal headroom at £15 billion for the 2029–30 fiscal year, in line with expectations. Key measures include energy bill relief, higher-than-expected-to-be-lower bank taxes, tariff suspensions on more than 100 supermarket products and a 3.9% increase in minimum wages. The budget also includes an additional £20.4 billion for the National Wealth Fund and British Business Bank to support investment and 140,000 jobs. On the economic outlook, the OBR cut its 2027 GDP growth forecast to 1% from 1.6%, citing the impact of the Iran war on energy prices, while raising its 2026 projection to 1.2% from 1.1%. Borrowing and public debt forecasts were also revised higher, weighing on the fiscal outlook.
2026-10-28