The UK Budget projects a steep borrowing decline that Societe Generale sees as potential support for sterling, FXStreet reported, as the Bank of England’s next rate decision approaches. FXStreet put GBP/USD support at 1.3250 and resistance at 1.3430. Reuters reported the pair at $1.3325 in a report updated at 5:49 a.m. EDT on Oct. 29, and said traders had fully priced a Bank Rate increase on Nov. 5.
The Budget, citing International Monetary Fund forecasts, says the UK is projected to reduce borrowing by 2.8 percentage points of GDP from 2025 to 2028, the largest near-term fiscal consolidation among G7 economies. The Office for Budget Responsibility (OBR) forecasts public sector net borrowing will decline from 4.2% of GDP in 2026-27 to 1.8% in 2031-32. The Budget projects a current-budget surplus in 2029-30, with £15 billion of headroom against the stability rule.
The UK Debt Management Office (DMO) raised its net financing requirement for 2026-27 by £7.4 billion to £258.6 billion. Planned gilt sales increased by £4.4 billion to £250.6 billion, while Treasury bills’ planned net contribution rose by £3 billion to £8 billion. The revised mix adds £2.7 billion in short conventional gilt sales and £7.5 billion in medium sales, while cutting long conventional sales by £7.7 billion. Reuters reported that gilt prices edged higher after the change, with 20- and 30-year yields reaching one-month lows.
The Budget plans a £100 Household Energy Payment from January 2027 for eligible households in council tax bands A to D in England. To help fund support, the government will raise the Bank Corporation Tax Surcharge from 3% to 6% for 15 months, from Jan. 1, 2027, through March 31, 2028. The government estimates the increase will raise £1.5 billion; eligible households are intended beneficiaries, while banks bear the higher surcharge.
FXStreet said Societe Generale’s medium-term view also depends on inflation easing and a successful EU reset. The Bank of England held Bank Rate at 3.75% on Sept. 17; its next rate decision is scheduled for Nov. 5.
