The 2025 Spring Statement from Labour Chancellor Rachel Reeves has caused some expected currency fluctuation today, but has lacked the fireworks of the October budget.
Lower-than-expected inflation figures for the UK released this morning had initially seen the pound fall against the dollar to $1.288. News that UK inflation had dropped to 2.8% versus the expected 3% had cheered markets somewhat, and saw rate cut expectations for the Bank of England’s May meeting rise slightly, causing the fall in the pound.
The weaker pound had seen gold in GBP climb to £2,350.72 per ounce at it’s peak today, still close to February’s high of £2,382.24. Inflation still remains above the BoE’s 2% target however, and is expected to remain high or increase in the months ahead, limiting how far the Bank could cut rates.
The Spring Statement initially saw the pound recover slightly to $1.290 but it remains volatile and has since dropped as low as $1.287. Chancellor Reeves laid out further plans to reduce government spending to keep within her fiscal rules without announcing any new tax increases. The OBR however has cut the UK’s growth forecasts in half from 2% this year to just 1%. Cuts to welfare spending to maintain fiscal rules, and falling growth hardly paint a rosy picture for the UK economy in the coming years, and there is still plenty of uncertainty economically and geopolitically.
Although gold remains relatively flat so far in trading this week, silver has enjoyed some stronger gains, particularly in the UK thanks to the weaker pound. Silver is now up more than 2% since the weekend, climbing back above £26 per ounce, and continuing its trend of gains in 2025.
The Statement has lacked the headline-grabbing policy announcements seen in the October budget last year, and it will be time that will tell if the government’s plan can reduce the UK’s burgeoning debt while maintaining growth. External factors like trade tariffs, and their impact on the UK economy, are instead likely to continue to play the larger role in the gold price in the short term.
