Solid Gold Berjangka – The pound sterling weakened to around US$1.335 against the US dollar on Monday (October 26)—the final week of October—retreating from a high reached over the past month. Investors are adopting a cautious stance ahead of the UK budget announcement this Wednesday, which may offer fresh insights into the direction of the government’s fiscal policy.
The UK government plans to provide more breathing room for businesses, potentially including a reduction in electricity levies. This measure is intended to lower corporate operating costs amid high energy prices and persistent inflationary pressures weighing on the economy.
The government also intends to allocate an additional £20.4 billion to the National Wealth Fund and the British Business Bank. The National Wealth Fund is set to receive £15.4 billion over five years—including £2 billion earmarked for renewable energy development—while the British Business Bank is slated to receive an additional £5 billion.
This additional funding will be financed through increased government borrowing. However, as the new borrowing plan is not expected to take effect until the 2028–2029 fiscal year, the immediate pressure on the UK bond market is considered limited.
Looking ahead, investors will be closely monitoring monetary indicators from the Bank of England, as well as policy decisions from the Federal Reserve and the European Central Bank this week. The interplay between the UK’s fiscal policy and the global interest rate trajectory will be a key factor in determining whether the pound can rebound toward its monthly high or continue its correction. (srh)