Burnham's Tax Hike Warning Hits Pound Sterling Rally

The British pound may face challenges as Prime Minister Andy Burnham has indicated that tax hikes are likely in the Autumn budget, reports the Times newspaper.

Burnham refused to rule out raising taxes to fill a hole in the autumn budget, saying 'I won’t be unrealistic and people need to understand that.'

Jane Foley, Senior FX Strategist at Rabobank, notes that while tax hikes could have growth-limiting implications, they would at least protect the government’s fiscal rules and settle the nerves of the gilt market.

The UK public sector debt is forecast to surge ever higher, placing significant restraints on the current and future governments.