02.09.202508:16:10UTC+00Sterling Slides as Gilt Yields Spike

The British pound has dropped below $1.34, marking its lowest point since early August. This decline is attributed to a notable increase in the yields of long-term UK government bonds, driven by apprehensions surrounding the nation’s fiscal outlook. The yield on the 30-year gilt surged to its highest level since 1998, adding pressure on Chancellor Rachel Reeves as the Autumn Budget approaches and further limiting fiscal maneuverability. It is widely anticipated that Reeves will introduce tax hikes to address the fiscal deficit. Meanwhile, political focus shifted to Westminster, where Prime Minister Keir Starmer conducted a cabinet reshuffle on Monday. At the same time, investors are paying close attention to the Treasury Committee’s questioning of Bank of England officials, looking for insights into future interest rate policies and any potential changes to the central bank’s quantitative tightening measures.