Sterling hovers near two-month high as UK fiscal concerns ease
The pound remains close to its strongest level against the dollar in more than two months as investors grow more comfortable with Britain's fiscal outlook. Markets are also weighing weak May economic growth and expectations that Andy Burnham names Shabana Mahmood, rather than Ed Miliband, as finance minister when he takes office next week.
Highlights
- Sterling trades near a two-month high as UK fiscal concerns ease following recent economic data and reassurances about government debt management.
- Britain shows minimal growth for May, with services sector expansion offset by contractions elsewhere, indicating fragile business confidence persists.
- The Office for Budget Responsibility warns extra tax rises or spending cuts are needed to prevent government debt from spiralling above current levels.
Growth outlook and debt pressures remain in focus
According to Reuters, Britain's economy ekes out minimal growth in May as the services sector expands while other parts of the economy shrink, pointing to fragile business confidence despite the recent improvement in sterling sentiment.The Office for Budget Responsibility said last week that Britain will need extra tax rises or spending cuts to stop government debt from spiralling higher from current levels. That warning keeps attention on how the incoming government balances support for growth with pressure to maintain fiscal credibility.
Andrew Wishart, UK economist at Berenberg, says stronger trend productivity growth would allow the economy to expand somewhat faster before inflation picks up and would make it easier to raise enough tax revenue to fund public spending. He says Burnham's policies so far are unlikely to make much difference to the UK's long-term growth prospects, though he adds that the prime minister-designate may benefit if improving productivity trends seen in 2025 continue into 2026.
Wishart says the UK economy is not out of the woods, but that resilient growth combined with flatlining employment suggests the pickup in productivity growth seen in 2025 has continued into 2026.
Our earlier coverage of the UK’s May GDP rebound highlighted that the economy returned to minimal growth after an April contraction, signalling fragile momentum ahead of the political handover to Andy Burnham. We also noted that higher energy prices tied to the Iran war were weighing on activity and adding to pressure on the public finances, keeping fiscal resilience and the growth outlook in sharp focus.
-
Afghanistan
-
Albania
-
Algeria
-
Angola
-
Argentina
-
Armenia
-
Australia
-
Austria
-
Azerbaijan
-
Bahamas
-
Bahrain
-
Bangladesh
-
Belarus
-
Belgium
-
Bolivia
-
Botswana
-
Brazil
-
Brunei
-
Bulgaria
-
Cambodia
-
Cameroon
-
Canada
-
Chile
-
China
-
Colombia
-
Congo
-
Costa Rica
-
Cote d'Ivoire
-
Croatia
-
Cuba
-
Cyprus
-
Czechia
-
DR Congo
-
Denmark
-
Dominican Republic
-
Ecuador
-
Egypt
-
El Salvador
-
Estonia
-
Eswatini
-
Ethiopia
-
Finland
-
France
-
Georgia
-
Germany
-
Ghana
-
Greece
-
Haiti
-
Hong Kong
-
Hungary
-
India
-
Indonesia
-
Iran, Islamic republic
-
Iraq
-
Ireland
-
Israel
-
Italy
-
Jamaica
-
Japan
-
Jordan
-
Kazakhstan
-
Kenya
-
Korea
-
Kuwait
-
Kyrgyzstan
-
Laos
-
Latvia
-
Lebanon
-
Lesotho
-
Libya
-
Lithuania
-
Luxembourg
-
Madagascar
-
Malaysia
-
Malta
-
Mauritius
-
Mexico
-
Moldova
-
Mongolia
-
Montenegro
-
Morocco
-
Mozambique
-
Myanmar
-
Namibia
-
Nepal
-
Netherlands
-
New Zealand
-
Nigeria
-
North Macedonia
-
Norway
-
Oman
-
Pakistan
-
Palestine
-
Panama
-
Papua New Guinea
-
Paraguay
-
Peru
-
Philippines
-
Poland
-
Portugal
-
Puerto Rico
-
Qatar
-
Reunion
-
Romania
-
Rwanda
-
Saudi Arabia
-
Serbia
-
Singapore
-
Slovakia
-
Slovenia
-
Somalia
-
South Africa
-
Spain
-
Sri Lanka
-
Sweden
-
Switzerland
-
Syria
-
Taiwan
-
Tajikistan
-
Tanzania
-
Thailand
-
Trinidad and Tobago
-
Tunisia
-
Turkey
-
UAE
-
Uganda
-
Ukraine
-
United Kingdom
-
United States
-
Uruguay
-
Uzbekistan
-
Venezuela
-
Vietnam
-
Yemen
-
Zambia
-
Zimbabwe
- Forex
- Crypto
