Calm Returns to British Markets Amid Fiscal Uncertainty

After a tumultuous week, British markets stabilized on Monday with the pound showing gains against the euro. The tension last week was fueled by rumors of no income tax hikes in the budget. Investors are now eyeing upcoming fiscal data and political developments for potential impact.

British markets experienced a welcome calm on Monday following last week's volatility. The pound strengthened slightly against the euro and remained steady vis-à-vis the dollar, marking a recovery from previous lows.

Reports that Finance Minister Rachel Reeves does not intend to raise income tax rates had initially alarmed investors. This uncertainty resulted in the pound hitting its weakest level against the euro since early 2023, which also impacted government bond performance.

Monday saw the euro down 0.1% against the pound, a positive indicator for UK markets. Yet, the easing may be temporary, with upcoming consumer inflation data and political factors possibly influencing future market dynamics.

(With inputs from agencies.)