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Forex

GBP’S NEVER ENDING PROBLEMS

ADMIN || 14th November 2025

GBP/USD is sliding today after an FT report that UK Prime Minister Keir Starmer and Chancellor Rachel Reeves have ditched their plan to raise income tax rates. The prime minister and chancellor have removed earlier proposals to raise the basic and higher income tax rates, officials said, amid fears the move would anger voters and further antagonise mutinous Labour MPs. The decision to change tack, taken this week, was communicated to the Office for Budget Responsibility on Wednesday in a submission of “major measures” set to be announced by Reeves in her Budget.

One person briefed on the proposals said the original Budget tax plan had been removed, while a second confirmed the fiscal statement had been rewritten since the first set of measures by Reeves was sent to the UK fiscal watchdog earlier this month. The chancellor is now exploring alternative ways to fill a fiscal hole estimated by economists at up to £30bn. One option to raise revenue would involve cutting the thresholds at which people pay different rates of income tax, while leaving the headline basic and higher rates of the tax unchanged.

The latest episode of political and fiscal developments bringing a major currency down highlights the case for the US dollar to retain its recent resilience on the “cleaner dirty shirt” principle.

The pound is down ~0.3% to lead G-10 moves early on Friday after the report which cited unidentified officials briefed on the move.

GBP/USD was one of the outperformers on Thursday when the the greenback fell along with Treasuries and US equities, and also gold. The government shutdown and the fallout from it are undermining the bull case for US assets, but the biggest appreciation risk for the greenback is the concern that many of the other major currencies f ace major potential or actual negatives from governments and/or central bank stances.

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