GBP/USD rises as UK gilt yields drop following Reeves budget confidence

GBP/USD has strengthened following UK Chancellor Rachel Reeves' budget announcement, with sterling gaining momentum as 10-year gilt yields fell to 4.42% on Wednesday. The pound's appreciation reflects market confidence in the government's fiscal management, despite concerns about increased borrowing. Reeves emphasized her commitment to controlling public debt, rejecting claims that tax increases were purely welfare-driven. The bond market's positive reaction, with the absence of vigilante selling pressure, has provided support for sterling. Technical analysis shows GBP/USD testing resistance near 1.2700, with immediate support at 1.2650. The calm bond market response contrasts sharply with previous UK fiscal announcements, suggesting improved credibility. Traders should monitor upcoming UK economic data and any shifts in gilt yields, as sustained bond market stability could further support sterling strength against the dollar.