Pound Struggles Amid Tough Budget Signals

Britain's pound hit its lowest point since April after finance minister Rachel Reeves reiterated fiscal rules in an upcoming budget, signaling possible tax increases. Anticipation surrounds the Bank of England's rate decision. Despite market expectations of tougher measures, the pound fell against the euro, reflecting economic challenges.

On Tuesday, Britain's pound hit a six-month low as Finance Minister Rachel Reeves emphasized her firm stance on fiscal responsibility in the forthcoming November budget. She hinted at potential tax hikes to avert austerity, setting the stage for the Bank of England's upcoming interest rate decision.

The pound's value fell by 0.64%, reaching $1.3056, sparked by Reeves' speech. The currency exhibited its weakest monthly performance against the dollar since July. The euro gained strength, climbing 0.3% to 87.96 pence, reflecting sterling's struggles.

Economists, such as Kit Juckes from Societe Generale, highlighted Reeves' justification for difficult budget decisions, predicting higher taxes. Despite limited market reaction, analysts predict the Bank of England might cut rates, influenced by fiscal policy clarity and evolving inflation pressures.

(With inputs from agencies.)