BUZZ-COMMENT-Labour isn't working for pound
Jan 9 (Reuters) - A crisis of confidence in Britain's fiscal outlook six months after Labour's landslide UK election victory has left sterling bulls discontent with the winter performance of the pound.
Rachel Reeves is facing her first major test as Britain's finance minister after the UK government's borrowing costs jumped sharply this week, potentially forcing her to cut future spending.
This week's rise in gilt yields has negatively impacted the pound - with GBP/USD sinking to a 14-month low of 1.2239 and GBP/EUR sliding to a two-month low a fraction shy of 1.1900 on Thursday.
Higher gilt yields also hurt GBP following the tax-and-spend budget unveiled by Reeves in her maiden budget on Oct. 30.
A UK Treasury minister has been called to parliament on Thursday to answer an urgent question about "the growing pressure of borrowing costs on the public finances". On Wednesday, the Treasury said its commitment to the UK government's fiscal rules was "non-negotiable".
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(Robert Howard is a Reuters market analyst. The views expressed are his own)
((robert.howard@thomsonreuters.com))
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