British government bonds and pound fall in tandem as monthly budget deficit exceeding expectations highlights fiscal challenges.

British government bonds fell, the pound fell for three consecutive days, and data released earlier showed that the UK's August budget deficit was higher than expected. The August budget deficit reached 18 billion, the highest monthly level in five years, exceeding Bloomberg economist's highest expectations by 4 billion. In the first five months of this fiscal year, the deficit has reached 83.8 billion, exceeding the Office for Budget Responsibility's forecast by 11.4 billion. These data serve as a reminder that the UK public finances are in a high-risk state ahead of the November budget, with Chancellor of the Exchequer Rachel Reeves expected to announce additional tax increases in the November budget. The yield on 10-year UK government bonds rose by 3 basis points to 4.71%; the yield on 30-year government bonds rose by 4 basis points to 5.55%. The pound fell by 0.5% to $1.3492, its lowest level since September 8th.