Published by Global Banking & Finance Review®
Posted on December 8, 2025
2 min readLast updated: January 20, 2026
Add as preferred source on GoogleSterling steadies after a major rise, driven by revised UK business data and easing budget concerns, with a potential Bank of England rate cut looming.
By Samuel Indyk
LONDON, Dec 4 (Reuters) - The pound steadied against the dollar on Thursday after rising over 1% the day before, its biggest daily jump since April, as an upward revision of business activity data painted a brighter picture of the economy.
The pound was last down less than 0.1% at $1.3348 after earlier touching its highest level in over five weeks at $1.33585.
November's S&P Global UK Composite Purchasing Managers' Index, which incorporates both services and manufacturing activity, was revised upwards on Wednesday, supporting the pound.
"The growth outlook doesn't look as muted as it was initially assumed," said Kirstine Kundby-Nielsen, analyst at Danske Bank.
BUDGET WORRIES RECEDE
The pound has jumped in the last week after British finance minister Rachel Reeves's long-awaited budget passed the bond market's test without too much fuss.
Investors had been concerned that Reeves's announcements, which included tax rises and large-scale spending, could have spooked bond investors, pushing yields higher.
But British borrowing costs have fallen since last week's announcement.
"The Labour government didn't really stir markets that significantly," said Danske Bank's Kundby-Nielsen.
"What we've been seeing over the past week is some of that budget risk being priced out."
Analysts also said the budget measures were unlikely to cause a rise in inflation, allowing the Bank of England to lower interest rates in the near term.
Markets are pricing in a 90% chance of a rate cut when the central bank meets later this month.
Against the euro, the pound was little changed at 87.44 pence.
(Reporting by Samuel IndykEditing by Bernadette Baum)
Interest rates are the cost of borrowing money or the return on savings, expressed as a percentage of the principal amount. They are influenced by central bank policies and economic conditions.
Currency hedging is a financial strategy used to protect against potential losses from fluctuations in exchange rates. It involves using financial instruments to offset risks associated with currency movements.
Financial markets are platforms where buyers and sellers engage in the trading of assets such as stocks, bonds, currencies, and derivatives. They play a crucial role in the economy by facilitating capital flow.
The pound's exchange rate indicates its value relative to other currencies. It affects international trade, investment decisions, and the overall economic stability of the UK.
Explore more articles in the Finance category
