The UK’s Autumn Budget lands on 28 October, and currency markets will be watching closely. Chancellor John Healey faces a familiar balancing act: supporting households and businesses through a difficult cost-of-living backdrop while keeping government borrowing under control. How he strikes that balance, and how investors read it, could move the pound against both the euro and the US dollar in the days that follow.
Sterling enters Budget week in decent shape, having recently touched a 17-month high against the euro. That strength isn’t guaranteed to hold, Budget days routinely produce some of the sharpest currency moves of the year, simply because weeks of speculation get resolved in a single afternoon.
Could the budget support the pound?
A clear, credible plan for managing government borrowing, one that reassures investors without choking off growth, would likely be well received. Measures that encourage business investment and employment, or ease cost pressures on companies, could support the wider economy and, by extension, sentiment toward sterling.
The relationship isn’t mechanical, though. More government spending doesn’t automatically weaken the pound, and tax rises don’t automatically strengthen it, or vice versa. Markets tend to react to the credibility of the overall package and its expected effect on growth and debt sustainability, rather than to any single measure in isolation.
What could put pressure on sterling?
Higher borrowing without a convincing plan to manage the UK’s debt could unsettle investors, pushing up the cost of government borrowing and weighing on the pound. Tax rises or spending cuts that squeeze household spending, discourage business investment or slow growth carry a similar risk.
The Chancellor’s challenge is finding a package that raises enough to fund public services without choking off an economy that many households and businesses still find challenging.
What this means for businesses
Exchange rates can move quickly once markets digest new information, and Budget Day is typically one of the more volatile stretches of the year for sterling. For any business paying overseas suppliers, receiving foreign currency, or transferring money internationally, that volatility has a direct effect on cost.
The Budget also feeds into interest rate expectations, a significant driver of currency markets in its own right, quite separate from the measures announced. Until the detail is known, forward-looking businesses often prefer to have a plan in place rather than wait and see what happens on the day — whether that’s a forward contract to lock in a rate for a future payment, a limit order to capture a favourable move, or simply a rate alert so a finance team isn’t caught off guard.
Planning ahead of Budget Day
Beyond the immediate market reaction, the Budget carries political weight too. The next general election must be held by 2029 at the latest, and the government will be under pressure to show progress on living costs, public services and growth well before then. Measures that ease household pressure could rebuild public support; unpopular tax changes or cuts to services could do the opposite.
Until Chancellor Healey sets out the final measures on 28 October, the direction of the pound remains genuinely uncertain. For businesses with international payments due around Budget Day, that uncertainty is itself worth planning for — keeping an eye on rates, understanding the options available, and having a currency partner on hand to act quickly if the market moves.
“Budget Day volatility catches a lot of businesses out simply because they haven’t looked at their options in advance,” said Kirpal Ubhoo, CEO of Indigo FX, a UK currency and international payments specialist. “A conversation with a currency specialist beforehand costs nothing, and means you’re not making decisions under pressure on the day itself.”
This article is for general information only and does not constitute financial or investment advice. Exchange rates can move in either direction, and past performance is not a guide to future movements.
Richard is the founder of the Good Money Guide (formerly Good Broker Guide), one of the original investment comparison sites established in 2015. With a career spanning two decades as a broker, he brings extensive expertise and knowledge to the financial landscape.
Having worked as a broker at Investors Intelligence and a multi-asset derivatives broker at MF Global (Man Financial), Richard has acquired substantial experience in the industry. His career began as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson), following internships on the NYMEX oil trading floor in New York and London IPE in 2001 and 2000.
Richard’s contributions and expertise have been recognized by respected publications such as The Sunday Times, BusinessInsider, Yahoo Finance, BusinessNews.org.uk, Master Investor, Wealth Briefing, iNews, and The FT, among many others.
Under Richard’s leadership, the Good Money Guide has evolved into a valuable destination for comprehensive information and expert guidance, specialising in trading, investment, and currency exchange. His commitment to delivering high-quality insights has solidified the Good Money Guide’s standing as a well-respected resource for both customers and industry colleagues.
