British Chancellor of the Exchequer Reeves will announce the first budget of the new Labour government on Thursday, October 30th. Foreign exchange analyst Gary Howes said that the pound should welcome UK Chancellor of the Exchequer Reeves' budget increase.

Government sources said last week that Reeves will raise approximately £ 40 billion ($52 billion) in funding through increased taxes and limited cuts to public spending to improve public services and fill the budget gap left by the previous government.

British media previously reported that UK Chancellor of the Exchequer Reeves intends to adjust debt policy in order to make room for additional fiscal spending. This news has led to an increase in UK government bond yields and pushed the pound back from Wednesday's nine and a half week low of 1.2908 to Thursday's high of 1.2972. The exchange rate has slightly fallen and is trading around 1.2955.

If Reeves really changes the fiscal rules, it could lead to a slowdown in the Bank of England's interest rate cutting cycle, which could have an impact on the future trend of the pound.

Forex analyst Gary Howes stated that there are indications that the budget will not have a completely negative impact on the UK economy and the pound, as any growth in investment spending should be welcomed in the long run.

An economist stated that the budget will drive half a percentage point of economic growth in the UK by 2025. Pantheon Macroeconomics states that this means the Bank of England will have to maintain a cautious attitude towards interest rate cuts, ensuring that rates remain at a higher level for a longer period of time.

Monex analysts mentioned in the report that the news of Reeves' intention to adjust debt policy has a positive impact on the pound, as market concerns over the budget have eased after a series of negative reports. Analysts predict that the pound exchange rate is expected to further rise before the end of this month. They predict that the GBP/USD exchange rate may reach 1.31, while the exchange rate against the euro may reach 1.21.

Daily chart of GBP/USD