Sterling has strengthened against a weakening US dollar, which has fallen since last Thursday for its longest losing streak since June 2025. Treasury yields have slid to five-week lows, adding pressure to the greenback, while UK political stability and firmer macro data have supported GBPUSD. Bloomberg reported the Chancellor, John Healey, will not raise capital gains tax, with higher budgetary spending instead to be funded through increased levies on banking income, tempering concern over the new fiscal plans.
Borrowing data also pointed to restraint: the government borrowed £24.5 billion in September, up 7.7% year on year and only slightly above the £23.8 billion forecast in a Reuters poll. Labour market and price figures have pushed expectations for Bank of England tightening, sending GBPUSD to five-week highs: unemployment fell from 4.9% to 4.7% in June–August, while wage growth edged up from 3.6% to 3.7%. CPI rose to 3.5%, an 11-month high; core inflation increased from 2.6% to 2.8% and services inflation from 3.4% to 3.7%, with futures pricing a base rate of 4.85% over 12 months, implying 110 basis points of hikes.
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