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Pound falls to seven-month low after Reeves' pre-budget speech - YAHOO FINANCE
Pound (GBPUSD=X, GBPEUR=X)
The pound was down 0.6% against the dollar (GBPUSD=X) on Tuesday afternoon, to trade at $1.3059 at the time of writing, its lowest point since mid-April.
Sterling slid after Rachel Reeves delivered a speech from Downing Street on Tuesday morning, in which the chancellor said she would make the "choices necessary to deliver strong foundations" for the UK's economy in the autumn budget on 26 November.
She said that since last year's budget the "world has thrown even more challenges our way".
"The choices I make in this budget this month, will be focused on getting inflation falling and creating the conditions for interest rate cuts to support economic growth and improving the cost of living," Reeves said.
The chancellor also emphasised that her commitment to self-imposed fiscal rules is "iron clad". One of Reeves' fiscal rules is to not borrow to fund day-to-day public spending by the end of this parliament, while the other is to get government debt falling as a share of national income by that time.
When answering questions from journalists after her speech, Reeves refused to say whether she would stick to the Labour party's manifesto pledge of not raising taxes on "working people", having promised not to increase the rates of value added tax (VAT), income tax and national insurance (NI).
Economists have warned that Reeves will likely need to announce billions in tax rises in the budget to shore up the UK's public finances, with the Resolution Foundation think-tank putting this figure at a potential £26bn.
Rachael Griffin, tax and financial planning expert at Quilter, said that Reeves' speech "was all about preparing the ground for some painful measures later this month".
