Steady Sterling Awaits Reeves' Budget Announcement

Sterling remained steady against the dollar as investors anticipated a tax-heavy budget from British finance minister Rachel Reeves. With the pound slightly up for the week, analysts are prepared for potential negative surprises. Reeves aims to keep inflation down, potentially aiding the BoE's interest rate cuts.

Sterling held steady against the dollar early Wednesday as cautious investors awaited British finance minister Rachel Reeves' anticipated tax-heavy budget speech, set for 1230 GMT. Expected to generate tens of billions in new tax revenue, the budget marks a significant test for Reeves' credibility with investors.

The pound, currently down just under 0.1% at $1.3159, has risen about 0.6% this week, buoyed by a weaker dollar and traders adjusting positions ahead of Reeves' speech. Analysts, like Jane Foley of Rabobank, suggest that short positions have prepared the market for potential disappointments.

Against the euro, the pound was likewise steady, reflecting broader economic expectations. Reeves' budget aims to curb inflation, facilitating future rate cuts by the Bank of England, which maintained its interest rates in November but is anticipated to resume cuts in December.

(With inputs from agencies.)