Sterling Under Pressure After Tax Hike Hints & UK Economic Slowdown.
On Tuesday, Reeves was reported to have said that the UK faces challenges from his first budget, amid growing questions about which taxes will be raised to keep the budget on track.
Meanwhile, the Bank of England (BoE) is expected to keep interest rates unchanged at its meeting on Thursday, although the latest inflation figures missed expectations, raising the possibility that the BoE could lower borrowing costs by the end of the year.
The pound sterling fell to its lowest level in seven months after Chancellor Rachel Reeves hinted at possible tax hikes in her pre-Budget speech. The statement sparked market concerns about government spending and consumer spending.
Sterling fell about 0.8% against the US dollar to around US$1.30, and also weakened about 0.4% against the euro.
Previously, UK economic data showed slowing growth, with a weaker private sector activity (PMI) putting additional pressure on the currency.
A weaker pound could trigger higher import costs and inflationary pressures in the UK, impacting investors holding GBP-denominated assets.
Upcoming tax policy and Bank of England decisions will be important triggers for the pound's next move.
Source: Newsmaker.id
