Sterling edged lower against the dollar on Wednesday, falling 0.2 per cent to $1.3472, as markets awaited British finance minister Rachel Reeves' multi-year spending review. The pound also weakened slightly against the euro, which rose 0.1 per cent to 84.68 pence. Reeves is expected to outline allocations from a £2 trillion public spending package, including investments in research, transport, nuclear energy and defence. Analysts say the review will confirm limited fiscal room, with additional funding likely needed in the autumn budget. Meanwhile, the dollar firmed after US-China trade talks in London concluded with a renewed framework for their tariff truce, supporting broad dollar gains. Despite sterling's nearly 8 per cent rise in 2025, economic uncertainty persists in the UK. Data on Tuesday showed rising unemployment and slowing wage growth, while April's stronger-than-expected inflation has complicated the outlook for interest rate cuts. The Bank of England is expected to hold rates steady next week. Attribution: Reuters Subediting: Nada Ali
