Pound once again under fiscal pressure 📉 🇬🇧

2:45 PM 19 September 2025

The pound is recording its third consecutive session of declines against the dollar, once again weighed down by the selloff in UK government bonds. GBP/USD is currently down 0.5%, making it the second weakest G10 currency (only the SEK is performing worse). However, the dollar’s strength has been capped at the 50% Fibonacci retracement level of the latest downward wave.

The latest UK public finance data has triggered anxiety in the bond market. The budget deficit reached a five-year high (£18 billion), overshooting all forecasts (by £4 billion above the highest estimates). The fiscal records did not go unnoticed — yields on 10-year gilts rose 3 basis points to 4.71%, while 30-year yields stand just below this century’s record of 5.69% (currently: 5.55%, +4 bps).

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The data only heightens tensions ahead of the November 2026 budget. Chancellor Reeves has repeatedly emphasized that deficit reduction is a non-negotiable goal. As a result, the market expects billions in new taxes, which could weigh on UK equity performance.

Source: xStation5

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