The British pound inched higher toward $1.355 as investors digested Chancellor John Healey’s first major speech ahead of the October 28 budget. Healey vowed to uphold fiscal discipline and rebuild the UK’s credibility in international bond markets, while setting out plans to stimulate regional growth by mobilizing institutions such as the National Wealth Fund and the British Business Bank to crowd in private investment.
Rising borrowing costs, driven by renewed inflation worries amid the US–Iran conflict and uncertainty surrounding Prime Minister Andy Burnham’s spending plans, are squeezing the government’s fiscal headroom and strengthening expectations of tax increases in the forthcoming budget. At the same time, oil prices climbed toward seven-week highs following US strikes on Iranian oil tankers.
On the data front, UK companies increased full-time hiring in August for the first time in four years, even as house prices recorded their first year-on-year decline since November 2023.
