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Pound falls to 7-month low against the US Dollar after Reeves speech: "Sterling is under heavy pressure"

ended 04. November 2025

THE Pound has fallen against the Dollar to a 7-month low and also fell against the Euro after Chancellor Rachel Reeves' pre-Budget speech.

Reeves held the surprise press conference this morning amid fears she will raise taxes this month.

The Office for Budget Responsibility (OBR) is expected to downgrade its productivity forecasts for the UK.

The Pound fell to a 7-month low against the Dollar to 1.31 and the Pound slid below 1.14 against the Euro.

Reeves said she will make the "necessary choices" for the economy in the Budget on November 26, adding "the world has thrown even more challenges our way" in the last 12 months.

She is expected to announce tax rises in the Budget despite Labour pledging not to hike income tax, VAT or National Insurance in its general election manifesto.

Tony Redondo, Founder at Newquay-based Cosmos Currency Exchange, said the Pound was under pressure.

He continued: "The Pound has fallen to a seven-month low against the US dollar, while 10-year gilt yields dropped to 4.38%. Bond markets welcomed the Chancellor's commitment to her fiscal rules, but falling gilt yields make Sterling less attractive to overseas investors, keeping the currency under pressure ahead of the Budget. 

"The Pound faces further headwinds from surging public borrowing and a projected £20-50billion fiscal black hole, with growth forecasts expected to be downgraded to just 1.3% for 2025. 

“I expect the Bank of England to hold rates at 4% on Thursday, given inflation is running near double its 2% target. Meanwhile, gold remains stable and largely insulated from UK developments, up over 50% in 2025, driven by global uncertainty and central bank diversification rather than UK-specific factors.”

Prem Raja, Head of Trading Floor at Currencies 4 You, agreed, adding: "Sterling is under heavy pressure this morning, with the Pound falling to a 7-month low against the Dollar of 1.31 and the Pound sliding below 1.14 against the Euro amid UK fiscal uncertainty and tax hike concerns.

"Sentiment deteriorated after Chancellor Reeves highlighted Budget shortfalls, spurring worries over fiscal tightening and fresh tax rises. Traders also see mounting odds for a Bank of England rate cut, pushing the Pound sharply lower against major peers. 

"Signs of weaker UK growth and productivity reinforce expectations for policy easing, keeping Sterling on the defensive despite oversold technical conditions."

Antonia Medlicott, Founder & MD at London-based Investing Insiders, said the speech had sparked uncertainty in the markets.

She added: "Rachel Reeves emphasised in her speech this morning that the upcoming Budget will be ‘focused on lowering inflation and paving the way for the Bank of England (BoE) to lower its key interest rate’. 

"That's a very clear signal of intent, and if the Chancellor follows through with inflation-reducing measures, then the BoE may feel it can safely lower the base rate without risking a rekindling of inflation. However, nothing is achieved yet and there is still considerable uncertainty about what is to come. 

"I think we could well hear the BoE making statements to the effect of ‘the door is open to future cuts’, but whether they're prepared to commit to it at the next meeting, I'm not so sure. It may come down to how the markets react in the next few days to this latest announcement."

4 responses from the Newspage community

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Tony Redondo
Founder at Cosmos Currency Exchange
The Pound has fallen to a seven-month low against the US dollar, while 10-year gilt yields dropped to 4.38%. Bond markets welcomed the Chancellor's commitment to her fiscal rules, but falling gilt yields make Sterling less attractive to overseas investors, keeping the currency under pressure ahead of the Budget.

The Pound faces further headwinds from surging public borrowing and a projected £20-50billion fiscal black hole, with growth forecasts expected to be downgraded to just 1.3% for 2025.

I expect the Bank of England to hold rates at 4% on Thursday, given inflation is running near double its 2% target. Meanwhile, gold remains stable and largely insulated from UK developments, up over 50% in 2025, driven by global uncertainty and central bank diversification rather than UK-specific factors.
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Antonia Medlicott
Founder & MD at Investing Insiders
Rachel Reeves emphasised in her speech this morning that the upcoming Budget will be “focused on lowering inflation and paving the way for the Bank of England to lower its key interest rate.”

That's a very clear signal of intent, and if the Chancellor follows through with inflation-reducting measures, then the BoE may feel it can safely lower the base rate without risking a rekindling of inflation.

However, nothing is achieved yet and there is still considerably uncertainty about what is to come. I think we could well hear the BoE making statements to the effect of “the door is open to future cuts", but whether they're prepared to commit to it at the next meeting, I'm not so sure. It may come down to how the markets react in the next few days to this latest announcement.
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Scott Gallacher
Director at Rowley Turton
I'm bemused by what the Chancellor thinks she will achieve by effectively talking the country down. Of course, she can’t ignore reality, but press conferences like this only undermine confidence when we most need stability and optimism. The Pound’s fall to a seven-month low shows how damaging this kind of messaging can be for confidence.

The only possible advantage might be a selfish desire to put some distance between the market reaction and the actual Budget, but in my opinion, it’s unlikely to work and simply drags out the bad news. It appears politically naïve, and you have to ask who is advising her that talking the country down is a good move?
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Prem Raja
Head of Trading Floor at Currencies 4 You
Sterling is under heavy pressure this morning, with the Pound falling to a 7-month low against the Dollar of 1.31 and the Pound sliding below 1.14 against the Euro amid UK fiscal uncertainty and tax hike concerns.

Sentiment deteriorated after Chancellor Reeves highlighted budget shortfalls, spurring worries over fiscal tightening and fresh tax rises. Traders also see mounting odds for a Bank of England rate cut, pushing the Pound sharply lower against major peers.

Signs of weaker UK growth and productivity reinforce expectations for policy easing, keeping Sterling on the defensive despite oversold technical conditions.