The pound rose to a five-week high vs. the dollar and euro on Fed rate cut hopes and UK fiscal reforms.

The British pound strengthened to a five-week high against the dollar, near 1.3350, fueled by dovish Federal Reserve rate cut expectations and UK fiscal stability after Chancellor Rachel Reeves announced a £26 billion tax increase to reduce budget deficits. Markets anticipate a Fed rate cut in December, with the pound supported by reduced political risk and potential Bank of England rate cuts. While some analysts predict further gains, others foresee declines due to differing outlooks on UK growth, ECB policy, and monetary divergence. The pound also rose to a 5-week high against the euro near 1.1450, driven by improved fiscal confidence, though long-term direction remains uncertain amid conflicting forecasts.