Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Business

Investors retreat from sterling ahead of spring statement and looming £15bn spending cuts

by March 25, 2025
March 25, 2025
Investors retreat from sterling ahead of spring statement and looming £15bn spending cuts

Institutional investors have offloaded the pound at the fastest pace since 2023 in anticipation of this week’s spring statement, where Chancellor Rachel Reeves is expected to unveil £15 billion in spending cuts as part of efforts to restore fiscal discipline.

According to Bank of America, the past three weeks have seen the sharpest outflows from sterling in over two years, with money managers — including asset managers and mutual funds — reducing exposure to the currency amid growing uncertainty around the UK’s economic trajectory.

The cuts, designed to meet Labour’s commitment to run a budget surplus by 2030, come as market sentiment remains fragile. Analysts at the US bank warned that traders are still “likely under-pricing the pound’s volatility risks,” adding: “We are concerned by the complacency in the foreign exchange volatility market. We do sense that market sentiment remains fragile and perhaps skewed towards a weaker fiscal outcome.”

The pound held steady against the US dollar on Tuesday, trading at $1.29. It has risen 3 per cent against the greenback since the start of the year, largely due to concerns over President Trump’s proposed tariffs weighing on the US currency. However, sterling has fallen 2 per cent against the euro in 2025 so far, sitting at €1.20.

Hedge funds have maintained “short” positions on the pound for much of the past year, betting on further declines in its value. By contrast, institutional investors have remained net-long on sterling, anticipating a rebound — a position that could quickly unravel depending on the tone and content of Wednesday’s fiscal statement.

The pound slumped to a two-year low on a trade-weighted basis earlier this year amid a broader global market sell-off. Since then, it has regained some ground on expectations that the Bank of England will carry out no more than two interest rate cuts this year — a scenario that typically supports a currency by preserving higher returns for investors.

Nevertheless, the spring statement is expected to shift the spotlight back onto the UK’s sluggish economic outlook. GDP forecasts from the Office for Budget Responsibility are likely to be cut from 2 per cent to closer to 1 per cent for 2025. Meanwhile, the UK continues to lead G10 economies on the so-called “misery index”, a measure that combines inflation and unemployment rates.

Goldman Sachs analysts echoed caution in the short term, suggesting that ongoing fiscal “noise” makes the pound “less attractive in the near term”. However, they noted that sterling could still benefit from the next round of US tariffs due on 2 April, which are expected to hit continental European economies harder than the UK.

The investment bank has revised its year-end forecast for the pound against the dollar to $1.29, up from a previous estimate of $1.26. Still, much hinges on how markets respond to Reeves’s first major fiscal intervention — and whether investors find her plans credible amid tightening public finances and subdued growth.

Read more:
Investors retreat from sterling ahead of spring statement and looming £15bn spending cuts

0
FacebookTwitterGoogle +Pinterest
previous post
Joint Economic Committee Report Sounds the Alarm on Debt and Deficits
next post
SME Marketing ‘Mistakes’ You’ll Make – Don’t Beat Yourself Up

You may also like

HSBC disables text functions on staff phones as...

October 18, 2023

HMRC phone lines under fire as callers face...

January 22, 2025

Extinction Rebellion co-founder fined for smashing Barclays window

January 9, 2023

Key learnings on what is needed to successfully...

August 29, 2022

Temu: How Can I Make A Change or...

March 17, 2023

Asda to increase staff presence at checkouts, reducing...

August 11, 2024

Hunt throws lifeline to many UK pubs where...

November 22, 2023

Business Development, dark art to team sport

October 5, 2024

Disney claims widower cannot sue over wife’s death...

August 15, 2024

How to Choose the Right Fulfilment Company for...

November 2, 2023

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Trump ally stands firm against ‘big, beautiful bill’ despite pressure: ‘It’ll completely backfire’

      June 8, 2025
    • Rubio condemns assassination attempt on Colombian presidential candidate Miguel Uribe

      June 8, 2025
    • Obama WH physician says Biden doc should have performed cognitive test

      June 8, 2025
    • Trump warns of ‘serious consequences’ if Elon Musk funds Democrats

      June 7, 2025
    • Musk jokes about reconsidering stance on Big Beautiful Bill after Schiff’s praise

      June 7, 2025
    • Musk deletes explosive posts about Trump and Epstein files

      June 7, 2025

    Categories

    • Business (8,152)
    • Investing (2,019)
    • Politics (15,571)
    • Stocks (3,136)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved