Pound Falls Below $1.33 as UK Faces Growing Fiscal Pressure Ahead of Autumn Budget

The British pound extended its losses on Tuesday, slipping below the $1.33 mark for the first time since mid-October, as investors reacted to worsening fiscal projections in the United Kingdom. The drop came amid reports that the Office for Budget Responsibility (OBR) is preparing to cut its productivity forecast, potentially widening the gap in public finances by around £20 billion.

The revised outlook has intensified pressure on the government ahead of the Autumn Budget, with markets concerned that lower productivity will limit growth potential and complicate efforts to stabilize the fiscal deficit. The development has weighed heavily on the pound, which fell more than 0.5% against the US dollar during the session.

Despite the slide, the currency’s downside may be cushioned by expectations of divergent monetary policies between the Bank of England (BoE) and the US Federal Reserve. Markets anticipate that the Fed will deliver a 25-basis-point rate cut at its upcoming meeting, while the BoE is expected to maintain its current stance in early November. However, speculation persists that the British central bank could consider a rate cut before the end of the year if inflation continues to cool.

From a market perspective, the GBP/USD pair appears vulnerable to further losses in the near term. Analysts suggest that if the pair breaches the 1.3230 level, it could test the 1.3200 support zone. On the upside, any recovery above 1.33 would require sustained momentum to push through 1.34, where stronger resistance is expected.

The broader sentiment surrounding the pound remains cautious as investors await clarity on the government’s fiscal strategy. With weaker growth prospects and an expanding budget gap, attention now turns to how policymakers plan to balance economic support with fiscal discipline in the coming months.