The Chancellor has been hit with another blow as the pound has hit a two-year low against the euro and dropped against the USD.
Financial experts are warning that they believe the “trend will continue” as the pound has fallen to 1.13 against the euro, this is the lowest it has been since May 2023.
The Chancellor is due to give her Autumn Budget on 26 November and the Office for Budget Responsibility (OBR) has warned there is a £20 billion fiscal deficit.
Tony Redondo, Founder at Newquay-based Cosmos Currency Exchange, said, “The pound has plunged to its lowest against the euro since May 2023 as markets brace for the Budget on 26 November.
While hoping lower borrowing costs and growth will help, speculation is growing that Chancellor Rachel Reeves must break Labour’s pledge and raise direct taxes.
“Bond markets are watching nervously. Excessive borrowing could trigger 2022 mini-Budget-style turmoil. With Budget Day looming, sterling volatility will likely persist as fiscal reality clashes with political promises.”
Prem Raja, Head of Trading Floor at Currencies 4 You, “Pound sterling exchange rates have fallen against G10 currencies consistently over the last month, but yesterday we saw GBP/EUR hit a 2-year low at 1.13 and 1.32 against the dollar – this is mainly due to the fact that analysts are now pricing in a rate cut for November/December from the Bank of England which is not good for sterling exchange rates.
“With the upcoming Budget and Bank of England meetings, we expect this trend to continue. UK economic weakness and uncertainty will be difficult to solve overnight, and this will reflect in exchange rates.”
