The FX market is behaving itself for now, but don't mistake that calm for a quiet news cycle. This week's UN gathering opens with President Trump seemingly open to a deal with Iran, and the UK has just committed air refuelling aircraft to Saudi Arabia to support the fight against the Houthis — a reminder that Britain isn't a bystander in this, even if sterling's chart doesn't show it yet.
But it's closer to home where the real pressure is building this morning. Public sector net borrowing for August landed at £18.3bn — £3bn above expectations. And this isn't a one-off miss. The chart tells the fuller story: since April, actual borrowing has consistently run ahead of the OBR's own March forecasts, month after month, without a single one landing back in line. What started as a manageable overshoot has become a pattern the Treasury can no longer explain away as noise.
To be fair to Chancellor Healey, a good deal of this isn't really his doing. Government is still operating under last year's budget, so neither he nor Burnham has had a genuine opportunity to shape policy around this environment. The bigger culprit is yields — with borrowing costs at their highest since the 1990s, simply servicing existing debt has become dramatically more expensive, and that's before any new spending decisions get made.
Which leaves Healey in an unenviable spot: inheriting a bind that predates him, with five months of data now suggesting the OBR's forecast itself needs a rethink before we even reach the Autumn Budget. Global yields don't care whose budget is in force, and if October and November follow the same script as the summer, fiscal credibility becomes the story rather than a footnote to it.
Sterling, for its part, is still holding remarkably steady — GBP-USD little changed on the day, GBP-EUR pinned around 1.166 — but a currency that shrugs off a widening borrowing gap for this long is usually just waiting for the right headline to stop shrugging.