UK Budget Bodes Poorly for the Pound No Matter What

A British Union flag flies from a souvenir stall near the Houses of Parliament in London.Photographer: Jason Alden/Bloomberg

The UK budget spells bad news for the pound regardless of whether a bid to balance the books keeps bond traders happy.

If Chancellor Rachel Reeves sticks to the script on Nov. 26 and delivers significant tax increases, she may be able to deter bond traders from demanding higher yields. But that risks harming economic growth and sending the pound lower.