The pound is strengthening today against all other G10 currencies. The EURGBP pair broke below 0.856, reaching its lowest level since late August. This momentum was driven by an upward revision of the UK's second-quarter GDP data, supported by pledges of fiscal discipline from Prime Minister Andy Burnham and signs of improving relations with the EU.
Figure 1: Major Currencies vs US Dollar (28.09.2026 - 30.09.2026)
Source: XTB Research, 30.09.2026
UK Economy Running at Full Steam
According to revised ONS data, the UK economy grew by 0.5% quarter-on-quarter in Q2, beating preliminary estimates of 0.4%. This continues a strong start to the year, following 0.6% growth in the first quarter. The economy entered the second half of the year with slightly greater momentum than previously assumed. Stronger growth could prompt the Bank of England to raise interest rates if persistent high energy prices feed into broader inflationary pressures, providing further support for the pound.
Burnham Plays Fiscal Discipline and EU Rapprochement Cards
Meanwhile, British Prime Minister Andy Burnham, speaking at the annual Labour Party conference, pledged to maintain strict fiscal rules. He also announced that at the UK-EU summit later this year, he will present several options for future relations with the Union, ranging from a customs union and returning to the single market, to rejoin the EU entirely. This opens up scope for potential "reverse-Brexit" sterling trades in the future.
Awaiting the Autumn Budget
The gilts market reacted to Burnham's announcements with subdued enthusiasm. The true test of the government's fiscal credibility will be the Autumn Budget, scheduled for publication on 28 October.
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Michał Jóźwiak, Financial Markets Analyst at XTB
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