British Pound To Dollar Forecast: GBP Struggles As Reeves Faces Scrutiny Over Budget Claims

  • December 2, 2025
  • Posted by: EWGFX
  • Category: news
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The Pound US Dollar (GBP/USD) exchange rate was flat on Monday as UK political news and US monetary policy expectations muted the pairing.

DAILY RECAP:

The Pound (GBP) started this week’s session struggling to find a clear direction, as the aftermath of the UK’s autumn budget continued to mute the currency.

In particular, GBP investors were left grappling with allegations that Rachel Reeves misled the country about the state of the public finances before the budget was announced.

The Office for Budget Responsibility’s (OBR) expected productivity downgrade was offset by better forecasts for wages and tax receipts, which left Reeves with a budget surplus rather than a hole to fill. Reeves was aware of this when she delivered her pre-budget speech, warning that the bleak outlook meant tax hikes were inevitable.

The latest row comes as Reeves and Prime Minister Keir Starmer face abysmal opinion polls and discontent among some Labour MPs. The possibility for political instability in the future muted GBP on Monday.

Meanwhile, the US Dollar (USD) struggled to press the advantage on Monday, despite a broadly risk-off market mood, as growing bets on a Federal Reserve interest rate cut this month maintained some pressure on USD.

Market odds for a December cut currently stand at 87.6%, up from 84.4% one week ago, as signs of a slowing labour market are expected to push the Fed to lower borrowing costs.

Near-Term GBP/USD Forecast: Budget Jitters to Keep Pound in Check?
Looking forward, the ongoing political and fiscal fallout from the autumn budget could continue to influence the Pound, particularly amid a lack of fresh British economic data.

If the political pressure on Reeves and Starmer intensifies, particularly from Labour MPs, we could see Sterling struggle to attract support as the spectre of political instability could spook GBP investors.

As for the US Dollar, market risk appetite could determine the safe-haven currency’s direction. A shifting mood could see USD wobble, while a tilt to risk-on or -off trade could dent or support the ‘Greenback’, respectively.