Ahead of the Autumn Budget announcement on Wednesday 26 November, we will be posting ongoing updates, commentary, and market reactions as the Chancellor’s announcements unfold.
20/11/25
One week to go: Why sterling’s ‘back in no-man’s land’
With only one week to until the Autumn Budget, our Head of Structured Products Jamie Jemmeson breaks down why FX markets are in “no man’s land” following Reeve’s shock announcement that took income tax rises off the table, as well as how her next moves might impact sterling.
Insights from the desk:
Uncertainty re-emerges:
The market is back in no man’s land again. GBP remains fragile as uncertainty returns to the Autumn Budget outlook.
“Last weekend, the market was expecting clear signals of an income tax rise—but Reeves has now U-turned.”
If not income tax, then what?
“With income tax off the table, the Chancellor is likely to focus on National Insurance tweaks, Inheritance Tax reform, VAT changes, and council tax or property reforms.
“Other measures could include pension relief tweaks, lower ISA allowances, high-value property levies.
These indirect, asset-based taxes keep GBP fragile and markets cautious.”
13/11/25
Sterling under scrutiny: Will Reeves’ Budget reassume markets, or pressure sterling?
With just two weeks until Chancellor Rachel Reeves unveils the Autumn Budget, markets are closely watching for signals on growth, borrowing, and fiscal policy.
Forecasting ranges will indicate whether markets view the Budget as a boost for sterling or a source of pressure.
Sentiment snapshot:
Markets under the microscope
Using GBP/USD as a barometer, we can use forecast ranges to gauge how markets might react to the upcoming announcement:
- Downside risk appears limited. The lowest 3-month forecast is 1.30, suggesting that even in a negative scenario, sterling is not expected to fall more than about 1.5% from current levels.
- This implies that much of the expected negative news may already be priced in. Markets seem to be anticipating the challenges highlighted in the budget and how Labour intends to address the deficit.
- However, the large gap between the highest and lowest forecasts indicates continued uncertainty. Forecasters have differing views on how effectively fiscal policy will be implemented and how the economy will respond.
- Despite this uncertainty, the average forecast over the next 12 months suggests a recovery in sterling. The consensus view points to a moderate rebound.
06/11/25
Weighing up Reeves’ Budget challenges – and their impact on GBP
All eyes are on Chancellor Rachel Reeves as she prepares to deliver her first Autumn Budget, a moment that could define both her leadership and the direction of the UK economy.
With a major fiscal gap to fill and Labour’s promises to uphold, Reeves must carefully balance economic growth with political trust to succeed.
What challenges will Reeves be facing?
Major fiscal gap vs tax rises
- The Office for Budget Responsibility forecasts a £20-30 billion shortfall, driven by weak productivity and rising borrowing costs.
- The Resolution Foundation warns Reeves could need up to £26 billion in new taxes, potentially clashing with Labour’s manifesto pledge to avoid raising income tax, national insurance, or VAT.
- Reeves has indicated she may put national interest above political expediency, setting the scene for tough and potentially controversial decisions.
Economic stagnation vs cost-of-living
- Weak productivity and stagnant growth are expected to strain the UK’s finances, lowering tax revenues and increasing welfare costs.
- Reeves aims to ease the cost of living and restore confidence in public finances, but must navigate inflationary pressures and global uncertainty.
- The budget will need to balance immediate support for households with measures to promote long-term growth, all while public patience and market reactions remain fragile.
There are a number of other key topics on Reeves’ agenda, such as tackling NHS waiting lists and protecting essential public services without resorting to deep austerity.
How she manages these pressures alongside fiscal discipline and long-term growth could have significant implications for the pound, as markets closely watch for signals of economic confidence and currency stability.
30/10/25
The Autumn Budget looms: History tells us volatility will follow
Rachel Reeves is facing a tough fiscal backdrop. High borrowing costs, sticky inflation and limited headroom to fund growth, all cast a shadow over November’s Autumn Budget.
Markets are split on what comes next for the pound: some see scope for a short-term lift if she delivers credibility, others fear renewed pressure if fiscal discipline slips.
We know UK Budgets have the power to drive real FX volatility – take Truss’ 2022 mini-Budget as an example, when GBPUSD fell to historic lows.
In the wake of the budget, the pound dropped 9.4% against the dollar in a few short days from the week’s highs before the announcement.
With the Autumn Budget now less than a month away and market confidence in Rachel Reeves wavering, markets are concerned the announcement could trigger sterling volatility reminiscent of 2022.
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With so much uncertainty afoot, waiting until after the headlines hit is never a sound strategy. Now is the time for businesses to ensure their FX policy is fit for purpose.
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