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1248 GMT – Sterling’s falls could prove limited in the near-term after the U.K.’s Office for Budget Responsibility posted its forecasts early ahead of the budget, Societe Generale’s Kit Juckes says. The OBR forecasts suggest more fiscal tightening on balance, he says. Sterling weakens in a “knee-jerk” reaction, “but the consensus is so negative I’m not sure how far we go in the near term,” he says. The market is pricing in an interest-rate cut by the Bank of England in December and expectations for cut in March could increase, he says. Sterling should fall over time but the near-term outlook is uncertain given negative positioning, he says. Sterling falls 0.1% to $1.3148. The euro rises 0.1% to 0.8801 pounds.([email protected])
Gilt Yields Rise, Sterling Falls After U.K.’s OBR Forecasts
1228 GMT – Yields on U.K. government bonds, or gilts, rise while sterling falls after the U.K.’s Office for Budget Responsibility released forecasts ahead of the budget. The OBR raised its 2025 economic growth forecast to 1.5% from 1% but lowered its productivity growth forecast to 1% from 1.3%. The OBR also raised its forecast for the current budget deficit and public sector net borrowing for 2025-26. The OBR estimates there will be headroom of 22 billion pounds to meeting the government’s first fiscal rule. Ten-year gilt yields rise 4 basis points to 4.532% after the OBR release. Sterling falls to an intraday low against the dollar to $1.3121 after the release. The euro rises to an intraday high of 0.8818 pounds. ([email protected])
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