GBP/USD Falls to Two-Month Low on Soaring UK Borrowing Figures

The Pound US Dollar exchange rate slipped to its weakest level since late July on Tuesday, as markets digested the latest UK public borrowing figures. The data showed that public sector net borrowing climbed to £18.3bn in August, significantly higher than the £15.7bn anticipated by economists.

This larger-than-forecast deficit adds to the financial pressures facing the government and leaves Chancellor John Healey with less room for manoeuvre as he prepares to deliver his first Budget next month.

The US Dollar initially strengthened on Tuesday as a cautious market mood and expectations of a hawkish Federal Reserve encouraged demand for the safe-haven currency. However, it subsequently surrendered most of its earlier gains following reports that Iran could be prepared to reopen the Strait of Hormuz if the US takes steps to ease military pressure.