Sterling falls to $1.33281 ahead of UK budget and Fed meeting

Key Facts

Sterling closed at $1.33281 on October 27, down from $1.33412 the previous day, according to EL7 data. The pair had closed at $1.33708 on October 23, putting recent trading within a sustained decline ahead of the announcement of the United Kingdom’s 2026 budget. On October 26, sterling fell 0.15% to $1.3348, according to Reuters, after reaching its highest level against the euro since the end of May 2025 on the previous Friday. Reuters said investors had avoided taking large positions ahead of Wednesday’s budget and a busy week of central bank meetings. Available data do not establish that the budget or the Fed meeting caused the currency’s decline.

Chancellor John Healey 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 UK government. The budget comes against a backdrop of higher-than-expected public borrowing: public sector net borrowing reached £24.5 billion in September, against the Office for Budget Responsibility’s forecast of £22.6 billion, an increase of £1.9 billion over the estimate. Borrowing also rose by £1.8 billion, or 7.7%, from a year earlier, and was the second-highest September borrowing on record, according to the Office for National Statistics. In the financial year through September, borrowing reached £97.8 billion, £4.4 billion below the same period a year earlier, but £6 billion above the Office for Budget Responsibility’s forecast. The office estimated that public debt exceeded £3 trillion at the end of September for the first time, describing the estimate as provisional and subject to revision.

The Chancellor said the budget “will meet the fiscal rules” and “will give businesses and families some of the stability they need to plan for the future.” The government also faces a higher annual inflation reading: the consumer prices index rose to 3.5% in September from 3.1% in August, according to the Office for National Statistics. Transport, particularly motor fuel, was the largest upward contributor to the monthly change in annual inflation rates measured by the consumer prices index and the consumer prices index including owner occupiers’ housing costs. In its September report, the Bank of England said inflation risks were tilted to the upside and that the Monetary Policy Committee stood ready to act to ensure inflation returned sustainably to its 2% target. Borrowing and inflation data provide the economic backdrop ahead of the budget presentation, while sources have not detailed the budget measures to be announced on October 28.

In the United States, the Federal Open Market Committee meeting runs on October 27 and 28, and the chair is scheduled to hold a news conference on October 28, according to the Federal Reserve calendar. On September 16, the Fed raised its target interest rate range by a quarter of a percentage point to 3.75%–4%. The convergence of the meeting and the budget presentation on Wednesday makes that day a key event for markets following the two currencies and monetary and fiscal policy. Among upcoming UK data releases, the Office for National Statistics has set November 18 for publication of October consumer price inflation. It has also set November 20 for publication of the next public finance data.