Sterling steadies as Healey budget keeps £15bn buffer, Fed next

Sterling steadied and gilts ticked up after Chancellor Healey delivered his UK budget, Investing.com reports. The budget kept £15 billion of fiscal headroom, which eased worries in the bond market, while the dollar held its recent gains as traders waited for the Federal Reserve decision.

Our last recap covered the dollar's climb to a two-week high on strong US data. The new story since then is the UK budget, a fresh batch of US trade figures and renewed hopes for a US-Iran deal.

UK budget: buffer kept, growth path reshaped

According to investingLive, the Office for Budget Responsibility lowered its near-term growth forecasts, but the government still expects to meet its fiscal rules with £15 billion of headroom at the end of the forecast period. The revisions against the March forecasts were mixed:

• 2026 GDP: 1.2%, up from 1.1%
• 2027 GDP: 1.0%, down from 1.6%
• 2028 GDP: 1.6%, unchanged
• 2029 GDP: 1.8%, up from 1.5%
• 2030 GDP: 1.7%, up from 1.5%

Before the speech, investingLive described the budget as a test of whether Healey could calm gilt investors with borrowing costs still elevated. The early market reaction, as reported by Investing.com, suggests the headroom figure did that job for now.

The Bank of England also published the Chancellor's remit letter for the Monetary Policy Committee, a letter from the Chancellor to the Governor released alongside the budget.

The fixings as a reference point

The ECB reference rates from 2026-10-28 show the dollar firm across most majors. These are official daily fixings, not live quotes. For the difference, see this explainer on ECB reference rates versus live forex quotes.

• EUR/USD fixed at 1.1133, down 0.15% from the 2026-10-27 fixing and 0.9% lower than on 2026-10-21.
• GBP/USD fixed at 1.3288, down 0.3%. The fixing has fallen on each of the last five days. Chart GBP/USD.
• USD/JPY fixed at 157.96, up 0.09%.
• USD/CHF fixed at 0.8306, up 0.24%.

The standout was the New Zealand dollar. NZD/USD fixed at 0.5613, down 1.57% from 0.5703. The headlines in our data do not explain the drop, so we flag it without a cause. Chart NZD/USD.

US data and yields

The US goods trade deficit widened to $134.9 billion in September, against $130.2 billion expected and $132.6 billion prior, investingLive reports. The outlet noted these were the two worst back-to-back months since just before Liberation Day. Separately, wholesale inventories rose 0.6% against a 0.5% estimate.

Investing.com reports that Treasury yields nudged toward one-week highs ahead of the Fed decision and Big Tech earnings.

Europe, oil and risk

German GfK consumer sentiment for November came in at -30.8 against -30.9 expected and -30.6 prior, according to investingLive. Economic expectations improved for a sixth straight month, rising to 2.1 from -3.4.

In emerging Europe, the Polish zloty fell to its weakest level since November 2023, Investing.com reports.

The investingLive European session wrap said crude oil stayed under pressure on US-Iran deal hopes, while gold rebounded. Qatari mediators presented Iran with a new draft deal, and Iran's response is expected by the end of the week, investingLive reports.

What to watch next

1. Fed decision. Investing.com and investingLive both flag the FOMC as the main event for the dollar.
2. Bank of Canada. Investing.com reports the loonie slipped as investors awaited the BoC and Fed decisions.
3. Big Tech earnings. investingLive points to Microsoft and Alphabet results as a second test for risk appetite.
4. Iran's reply. A response to the Qatari draft is expected by the end of the week, per investingLive, with oil the main channel to currencies.
5. Gilt follow-through. Watch whether the calm in gilts and sterling holds as markets digest the OBR forecasts.