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    Scotiabank strategists say the Pound is underperforming against nearly all G10 currencies

    by VT Markets
    /
    Oct 10, 2025
    The Pound Sterling (GBP) is currently weak, falling by 0.2% against the US Dollar (USD). It is not performing well against most G10 currencies, except for the Norwegian Krone (NOK). So far, there haven’t been any major data releases in the UK, and the yield spreads between the UK and the US have stayed the same. However, the 3-month risk reversals have dropped, suggesting that traders are paying more to protect themselves against further GBP weakness.

    Concerns Over UK Fiscal Situation

    There are ongoing worries about the UK’s fiscal health. Chancellor Reeves is feeling pressure to boost the UK’s financial safety net ahead of the budget announcement on November 26th. The Pound is struggling today, lagging behind almost all major currencies. Recent data from the Office for National Statistics (ONS) shows that Q3 GDP growth is only at 0.1%, which doesn’t help. This slow growth is making investors anxious. The weakness appears to stem more from sentiment than from interest rate differences. The cost of options that protect against a decline in the Pound has increased significantly this past week. This indicates that traders are preparing for further declines as winter approaches.

    Government Financial Concerns

    The government’s financial state is a top concern, with the UK’s debt-to-GDP ratio near 99%. Many remember how markets reacted negatively to unfunded fiscal plans back in late 2022, and there’s clear anxiety about the upcoming budget on November 26th. Any suggestion of loosening fiscal policies without a solid plan could lead to a sharp market response. For derivatives traders, this signals a good opportunity to take advantage of a potential drop in the Pound or a rise in market volatility. Implied volatility for GBP options is likely to rise as the budget date approaches. One strategy could involve buying put options on GBP/USD or setting up put spreads to align with the current negative sentiment. Create your live VT Markets account and start trading now.

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