Market News

Summary

• Finance Minister John Healey expected to present the budget after 1230 GMT in parliament.

• Budget forecasters say the government's fiscal headroom has shrunk to about £15 billion.

• Banks, gambling companies and online marketplaces are expected to face higher taxes.

LONDON, Oct 28 (Reuters) — Sterling dipped against the euro and the dollar on Wednesday ahead of a highly anticipated budget announcement outlining how Prime Minister Andy Burnham's government plans to address the country's fiscal needs without unsettling the bond market.

The pound fell 0.1% to a more than one-week low of $1.329. It also declined 0.1% against the euro to 83.7 pence. The single European currency had hit its lowest level against sterling since May 2025 on Tuesday.

UK Finance Minister John Healey was expected to announce a cautious budget plan in parliament shortly after 1230 GMT. The plan was set to outline how the government would raise revenue to finance economic growth, including spending on defence and artificial intelligence, while addressing the high cost of living.

Banks, gambling companies and online marketplaces such as Amazon and Temu were expected to face higher taxes, as budget forecasters warned that the government's fiscal headroom had narrowed to around £15 billion.

“Spending increases look set to be modest, with relatively small new commitments paid for by reallocating money from elsewhere rather than through extra borrowing,” Matthew Ryan, head of market strategy at Ebury, said in a note.