Pound near 17-month high against euro ahead of British budget
TLT•Sterling traded at 83.67 pence per euro, near last week’s 17-month high of 83.63, ahead of Britain’s budget announcement. The pound fell 0.2% against the dollar to $1.3316, while currency options indicated expectations of a relatively muted budget event.
1. Sterling and the budget
The pound held near a 17-month high against the euro a day before finance minister John Healey’s budget announcement. Sterling was at 83.67 pence per euro, close to last week’s 83.63, its strongest level against the euro since May 2025. It fell 0.2% against the dollar to $1.3316.
2. Markets assess budget plans
Traders have supported sterling against the euro on expectations of a largely undramatic budget, while political developments in France have weighed on the shared currency. Healey is likely to offer some help to households facing higher energy bills and has hinted that businesses will get “breathing space” from rising costs. Investors will focus on fiscal headroom, borrowing and whether the outlined plan is viewed as plausible.
3. Options point to muted move
Morgan Stanley analysts said investors they spoke with largely expected a low-key, low-volatility event. Euro/sterling overnight implied volatility was 5.3%, below the more than 10% recorded just ahead of last year’s budget; sterling/dollar overnight implied volatility was 8%.
