FX.co ★ Pound Hovers Near Two-Week Low as Fiscal Worries Mount

The British pound hovered around $1.35, remaining close to Friday's two-week low of $1.346, as investors focused on the upcoming S&P Global flash PMI survey and awaited comments from officials at both the Bank of England and the Federal Reserve. Concerns persisted regarding the UK’s fiscal outlook. Recent reports revealed that public sector net borrowing in August escalated to nearly £18 billion, significantly exceeding market predictions of £12.5 billion. This unexpected increase heightens pressure as the November Autumn Budget approaches, particularly amid rising global debt worries that recently pushed 30-year gilt yields to record highs. This situation could constrain the government's capacity for further spending initiatives. In the meantime, the Bank of England maintained interest rates at 4% following a 7–2 vote, reduced the pace of quantitative tightening to £70 billion, and upheld a cautious policy approach. Currently, markets anticipate the next rate cut to occur only in 2026.