**GBP/USD Retraces Gains Amid UK Political and Economic Uncertainty**
GBP/USD is retracing its recent gains from the previous session, trading around 1.3150 during Asian hours on Friday. The pair has depreciated as the Pound Sterling (GBP) comes under pressure amid mounting concerns over fiscal discipline and political stability in the United Kingdom (UK).
According to a report by the Financial Times, the UK government has dropped plans to raise income tax rates ahead of the November 26 budget. Prime Minister Keir Starmer and Chancellor Rachel Reeves have abandoned earlier proposals to increase the basic and higher tax bands. Instead, they are pursuing less direct revenue measures to address a £30 billion fiscal shortfall.
The British Pound remains vulnerable as softer-than-expected economic data have strengthened expectations of a Bank of England (BoE) rate cut in December. The UK economy posted only modest growth in Q3, while September GDP declined on a month-on-month basis. These developments have added to the pressure on the GBP/USD pair.
However, the downside for GBP/USD could be limited as the US Dollar (USD) also faces headwinds. Economic caution in the United States (US) has overshadowed improved sentiment following the resolution of the government shutdown. National Economic Council Director Kevin Hassett warned that some October data may “never materialize,” as several agencies were unable to gather information during the shutdown. Initial private-sector reports indicate a cooling labor market and wavering consumer confidence, with persistent concerns about inflation.
US President Donald Trump signed the government funding bill on Thursday, officially ending the record 43-day government shutdown in US history.
**Key Takeaways:**
– GBP/USD trades around 1.3150, retracing earlier gains.
– The UK has dropped plans for income-tax increases, opting for alternative fiscal measures.
– Weak UK economic data increases expectations of a BoE rate cut.
– US economic uncertainty persists despite the end of the government shutdown.
– Ongoing concerns over fiscal and political stability are pressuring the Pound.
Stay tuned for further updates as developments unfold in both the UK and US economies.
https://bitcoinethereumnews.com/finance/gbp-usd-slips-near-1-3150-as-uk-government-drops-plans-to-raise-tax-rates/