26 November 2025 – London: Sterling may face modest depreciation as UK Treasury chief Rachel Reeves is expected to announce fiscal tightening measures in Wednesday’s budget, according to ING analyst Francesco Pesole.

Pesole notes that disinflationary fiscal measures could push some risk premium out of the UK government bond market while increasing expectations for Bank of England interest-rate cuts. However, he warns that a budget failing to convince markets of a sustainable fiscal path could weigh more heavily on sterling.

As of Wednesday, sterling was slightly up 0.1% at $1.3182, while the euro fell 0.1% to 0.8777 pounds. Pesole adds that if markets discount fiscal risk but remain unconvinced of upcoming rate cuts, sterling may trend slightly lower.