Sterling Closes at $1.33065 as UK Budget and Fed Loom

Key Facts

Sterling closed at $1.33065 on October 27, down from $1.33412 on October 26, according to EL7 data. It had stood at $1.33708 on October 23, leaving the latest close below its levels on each of the previous two trading days. The move came ahead of the UK budget presentation and the Federal Reserve meeting, both scheduled for October 28. The site quoted an ING currency strategist as saying that stable sentiment around artificial intelligence had returned markets to a backdrop supportive of the dollar, alongside a hawkish Fed stance and rising energy prices.

The budget comes amid financial figures that are drawing greater scrutiny to Britain’s borrowing position. Public sector borrowing reached £24.5 billion in September 2026, an increase of £1.8 billion, or 7.7%, from September 2025. The figure also exceeded the Office for Budget Responsibility’s forecast by £1.9 billion, according to the Office for National Statistics. Borrowing for the financial year through September stood at £97.8 billion, £4.4 billion, or 4.3%, below the same period a year earlier. But it remained £6.0 billion above the office’s forecast.

The Office for National Statistics provisionally estimated public sector net debt at £3,005.0 billion at the end of September, equivalent to 94.0% of gross domestic product. The office said the estimate was provisional and subject to revision. On prices, the Consumer Prices Index rose 3.5% in the 12 months to September, compared with 3.1% in August. Transport, particularly motor fuels, made the largest upward contribution to the monthly change in the annual inflation rates for the Consumer Prices Index and the Consumer Prices Index including owner occupiers’ housing costs. These fiscal and inflation figures place the budget in a context shaped by borrowing costs and price pressures.

Treasury Secretary John Healy said the budget “will abide by the fiscal rules” and “will give businesses and households some of the stability they need to plan for the future.” Healy is due to present the 2026 budget to Parliament on October 28, with details of the announcements and supporting documents to be made available the same day, according to the Treasury. The information available did not include details of the measures the government will announce. In September, the Bank of England said risks to the inflation outlook were tilted to the upside. Its Monetary Policy Committee added that it was “ready to act as necessary to ensure CPI inflation remains on a path to meet the 2% target in the medium term.”

In the United States, the Federal Reserve will hold its Federal Open Market Committee meeting on October 27 and 28, with a news conference on the second day. On September 16, the central bank decided to raise its target interest rate range by a quarter percentage point to 3.75%–4%, with the new range effective from September 17. The Associated Press forecast that policymakers would leave the main interest rate unchanged at the end of Wednesday’s meeting, noting that investors see only a slight chance of a rate increase in October. After the budget and meeting, the next release of UK public finance data is due on November 20.