This was not the start to September GBP desperately needed

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waterman
Written by Dan Waterman
September 2nd 2025
The Pound begins the new month in the same fashion as last month; weaker..

The summer was meant to be 'kind' for the Pound.

At the beginning of August, GBP v EUR lost 1.2% in the first few days trading and it took the pair 2-weeks to reclaim the loss. 0.5% has been wiped since 7am this morning and is now in danger of a similar August trend.

September was meant to be a month that showed (maybe just about still shows) promise, but Sterling is already facing a serious uphill battle.

30-year UK bond yields have hit a 27-year high at 5.69%, nearly a whole percentage point higher than the US and 2% higher than Japans record figure.

Investors have reacted negatively to the UK government reshuffle after Prime Minister Keir Starmer promotes a number of staff who are tied to higher tax ideology. The Government looks set to deal with the country's debt problems by raising taxes and not cutting spending. 

But with inflation rising (a key divergence issue with other nations) and the Government continuing to spend, the Government is needing to borrow more.

Investors continue to oblige as the return on investment is high, but there will come a point when concerns over the country's sustainability comes into question and then things are dead in the water.

Thankfully (at least in terms of the Pound) the UK isn't the only one in borrowing cost trouble.

German 30-year bonds have hit a 14-year high at 3.41% and French 30-year bonds have hit a 16-year high at 4.5% today. Global socks are down over global growth and recession fears and traders turn to the safe-haven currencies in particular the USD.

The Pound is on track for its worst day in almost 3-months versus the USD, giving back half of the gains it made in August. 

The choppy seas look like they may have come early..