The British pound rose in European trading on Thursday against a basket of global currencies, extending its gains for a sixth consecutive session against the US dollar and reaching a four-week high, supported by renewed buying of the UK currency as financial-stability concerns eased following the announcement of the 2025 budget.

UK Chancellor Rachel Reeves presented the new Autumn Budget before Parliament, outlining a series of policy measures that give her government wider room to meet its borrowing targets.

The new budget includes a variety of tax increases that allow the government to double a key fiscal buffer without breaking any election pledges on income-tax rates.

Price Overview

The pound rose against the dollar by 0.2% to 1.3268$, its highest level since October 29, up from an opening level of 1.3241$, after hitting an intraday low of 1.3240$.

Sterling gained 0.6% on Wednesday, marking its fifth straight daily advance after the release of the new UK budget.

Autumn Budget 2025

Chancellor Rachel Reeves delivered the Autumn Budget 2025 to Parliament on Wednesday amid heightened attention over the fiscal pressures created by a budget deficit estimated at around £20 billion.

The new budget imposes additional taxes on workers, pension savers, and investors in order to create more fiscal space that enables the government to meet its borrowing objectives.

The Office for Budget Responsibility (OBR) said the government will now secure more than double the previous reserve needed to meet its fiscal rules, despite higher social-welfare spending.

The OBR estimated that the Labour government’s tax measures will raise £26 billion ($34 billion), pushing the overall tax burden in the economy to a record high.

Key Measures in the Autumn Budget 2025:

• Freezing income-tax bands and National Insurance thresholds until 2031.

• Higher taxes on investment income.

• Raising dividend-tax rates.

• A new tax on high-value residential properties.

• A levy on university income from foreign students.

• Reforms to pension-tax privileges.

• A 4.1% rise in the National Living Wage.

• A 4.8% increase in state pensions.

• Incentives and relief measures for the London Stock Exchange.

Core Budget Objectives

• Reducing borrowing: The OBR projects government borrowing to fall from £150 billion in 2024–2025 to £67 billion by the 2029–2030 fiscal year.

• Achieving a surplus: The budget is expected to generate a surplus of £21.7 billion by 2029–2030.

The Japanese yen rose in Asian trading on Thursday against a basket of major and minor currencies, resuming the gains that briefly stalled against the US dollar and nearing a one-week high, supported by weakness in the US currency as expectations grow for a Federal Reserve rate cut in December.

With current odds still low for a Bank of Japan rate hike at the December meeting, investors are awaiting further evidence on the outlook for policy normalization heading into the new year.

Price Overview

The dollar fell against the yen by about 0.5% to 155.72¥, from an opening level of 156.45¥, after posting an intraday high of 156.46¥.

The yen ended Wednesday down roughly 0.3% against the dollar in a profit-taking pullback, after hitting a one-week high of 155.66¥ the previous day.

US Dollar

The dollar index fell on Thursday by around 0.15%, extending its losses for a fourth consecutive session and hitting its lowest level in nearly two weeks, reflecting continued weakness in the US currency against a broad basket of global peers.

A run of soft US economic data and more cautious Federal Reserve commentary has strengthened expectations for a US rate cut in December, as markets await further labor-market indicators.

Bloomberg reported that White House economic adviser Kevin Hassett has emerged as the leading contender to become the next Fed Chair. Like former President Trump, Hassett has argued that interest rates should be lower than they have been under current Chair Jerome Powell.

US Treasury Secretary Scott Bessent said on Tuesday that there is a strong likelihood Trump will announce his choice before Christmas.

Japanese Interest Rates

Sources told Reuters that the Bank of Japan is preparing markets for a possible rate hike next month, reviving its earlier hawkish stance amid renewed concerns over the yen’s sharp depreciation and diminishing political pressure to keep rates low.

Market pricing for a 25-basis-point hike at the December meeting is currently near 40%.

To reprice these expectations, investors are awaiting fresh data on inflation, unemployment, and wage trends in Japan.

Opinions and Analysis

Vasily Serebriakov, FX strategist at UBS in New York, said that it will be difficult to change the yen’s trajectory with a single rate hike unless the Bank of Japan delivers a hawkish move and commits to additional increases throughout 2026 to rein in inflation.

Serebriakov added that without such action, the yen is unlikely to benefit meaningfully, given the still-wide interest-rate differentials between the US and Japan and the continued low-volatility environment.

Jane Foley, head of FX strategy at Rabobank in London, said there is a possibility of intervention during the Thanksgiving period, but if market fear of intervention is enough to restrain dollar-yen upside, the likelihood of actual action may decline.

UK Chancellor Rachel Reeves presented the government’s Autumn Budget to Parliament on Wednesday, announcing a series of measures aimed at raising revenue from workers, pension savers, and investors, in order to create fiscal space that allows her to meet the government’s borrowing targets.

Her remarks followed the unexpected publication of the Office for Budget Responsibility’s economic forecasts on its website prior to the budget announcement, an incident the OBR later described as a “technical error.”

The main measures announced by the Chancellor were as follows:

Freezing income-tax thresholds

The UK will freeze income-tax bands for an additional three years starting in 2028. The measure is expected to generate 7.6 billion pounds in the 2029/2030 fiscal year.

New tax on high-value homes

England will impose an additional local council levy on high-value properties beginning in 2028, including:

2,500 pounds annually for homes valued above 2 million pounds.

7,500 pounds annually for properties worth more than 5 million pounds.

The tax will be collected alongside existing council tax. It is expected to raise more than 400 million pounds by 2031 and will affect less than 1% of homes in the country.

Fuel-duty freeze

The government will extend the current freeze on fuel duty. The temporary 5-pence-per-litre cut, first introduced during the pandemic and due to expire in April 2025, will be extended until September 2026.

Successive governments have maintained the freeze since 2011 to avoid driver protests. Fuel duty remains a major source of revenue, generating roughly 25 billion pounds annually.

Ending the two-child benefit cap

The two-child benefit limit will be scrapped starting next April. The cap, imposed in 2017, prevents many low-income families from receiving additional support for a third child and beyond.

The OBR estimates that removing the cap will cost the government 3.1 billion pounds in 2029/2030.

New road-use charge for electric vehicles

A new distance-based charge for electric and plug-in hybrid cars will take effect from April 2028, set at:

3 pence per mile for electric vehicles.

1.5 pence per mile for plug-in hybrids.

The measure is expected to raise 1.4 billion pounds. The OBR noted it will offset roughly one quarter of the government’s projected revenue losses by 2050 due to the shift away from petrol and diesel.

Raising dividend taxes

The government will increase dividend-tax rates by two percentage points starting in April 2025:

The basic rate will rise to 10.75%.

The higher rate will increase to 35.75%.

Changes to business-property taxes

Reeves said reforms to Business Rates will include:

Higher taxes on high-value commercial properties.

A permanent tax reduction for more than 750,000 retail, hospitality, and leisure businesses.

The cuts will be funded through higher taxes on commercial properties valued above 500,000 pounds, including large corporate warehouses used for online operations.

Reform of the Motability programme

The Motability scheme, which allows people with disabilities to lease state-funded vehicles, will undergo reforms aimed at reducing what Reeves described as “generous support” funded by taxpayers.

Reduced pension-tax allowances

The government will introduce a 2,000-pound annual cap on contributions that can be transferred into pension funds before National Insurance is applied, beginning in 2029. The measure is expected to generate an additional 4.7 billion pounds in the 2029/2030 fiscal year.

Lower tax-free savings allowance

The annual tax-free savings limit for ISA accounts will be reduced from 20,000 pounds to 12,000 pounds for most savers beginning in April 2027, while those aged 65 and above will retain the full allowance.

Lower household energy bills

The UK will reduce the average household energy bill by 150 pounds per year starting next April by shifting some costs into general taxation and reducing the size of the home-improvement support programme.

Copper prices climbed on Wednesday as traders increased their bets on a Federal Reserve rate cut, alongside growing expectations of stronger industrial-metal prices.

UBS said it expects copper to rise next year, citing tightening supply caused by ongoing disruptions at major mines, in addition to long-term structural demand driven by electrification and clean-energy investment, according to a research note released Friday.

In its latest forecast update, the bank raised its March 2026 copper target by 750 dollars per metric ton to 11,500 dollars. It also lifted its June and September 2026 targets by 1,000 dollars each, to 12,000 dollars and 12,500 dollars, respectively, and introduced a new December 2026 target of 13,000 dollars per ton.

UBS also sharply increased its market-deficit projections to 230,000 tons for 2025, up from a previous estimate of 53,000 tons, and to 407,000 tons for 2026, compared with 87,000 tons earlier. The bank said falling inventories and persistent supply risks will keep conditions tight.

It added that this year’s mine disruptions—including production issues at Freeport-McMoRan’s Grasberg mine in Indonesia, slow output recovery in Chile, and recurring protests in Peru—highlight structural supply constraints likely to persist into 2026.

Freeport-McMoRan said last week it plans to resume production at Grasberg by July, after a fatal accident forced operations to halt two months ago.

UBS downgraded its refined-copper production-growth estimates to 1.2% for 2025 and 2.2% for 2026, citing ore-grade deterioration and operational challenges.

The bank expects global copper demand to grow 2.8% in both 2025 and 2026, supported by electric vehicles, renewable energy, grid investment, and data-center expansion.

UBS added that any downside in prices would likely be short-lived, recommending that investors maintain long positions or use volatility-selling strategies.

In US trading, March copper futures jumped 1.7% to 5.17 dollars per pound as of 15:51 GMT.