GBP Slumps to 1.33 Amid UK Fiscal Pressures and Hawkish Fed Stance

The British Pound (GBP) has dropped to 1.33 against the US Dollar (USD), as investors react to the UK's deteriorating fiscal position and a hawkish stance from the Federal Reserve (Fed).

Public sector borrowing in the UK climbed to £18.27 billion in August, exceeding market expectations and contributing to a cumulative deficit of £77.3 billion between April and August.

This has added pressure on UK Chancellor John Healey ahead of his first budget next month, with strategists at Scotiabank emphasizing that investors remain focused on the UK's fiscal trajectory.

Boston Federal Reserve President Susan Collins signaled support for a more restrictive policy stance, reinforcing expectations that interest rates could move higher or remain elevated and supporting the US Dollar against the Pound.