Speculators pile record bets against the pound ahead of Labour's pre-Budget speech

Forex markets are witnessing the most sustained assault on sterling since the 2016 Brexit vote, with net short positions topping £6.5 billion, according to the Commodities and Futures Trading Commission. The surge reflects traders' lack of confidence in the Labour government ahead of Chancellor John Healey's Budget address at the party conference in Liverpool. Rising global borrowing costs, driven by the ongoing Iran war and fears of higher energy prices, have pushed the pound down to $1.32, its weakest against the dollar in nearly three months after the Bank of England kept rates steady.

Shadow Chancellor Andrew Griffith described the situation as a "disastrous vote of no confidence" in Labour, while Rabobank's Jane Foley said speculators are reluctant to hold long positions into the Budget. A weaker pound may aid exporters but also inflates import costs, complicating inflation control and limiting the scope for future interest-rate cuts. The Treasury declined to comment on the market moves.