LONDON, Nov 24 (Reuters) - The pound held steady against the dollar on Monday, with investors cautious about the currency ahead of Britain's budget announcement this week.
Finance Minister Rachel Reeves will announce her long-awaited budget on Wednesday, seeking to reassure investors that the government can be trusted to be fiscally prudent while honouring pre-election promises not to raise taxes on working people.
Sterling last traded at $1.3095 , flat on the day after losing 0.5% last week.
"The potential downside risks for the UK economy related to the budget are going to keep all eyes on sterling. So that's our real focus," said Nick Rees, head of macro research at Monex Europe.
He said the focus would be not only on the announcement itself but on the overall forecast for the economy, which would likely trigger a reaction in the pound.
Until then, Rees said markets would "hold fire", noting that the pound had not reacted on Friday to softer economic data.
That data showed business growth almost ground to a halt this month and that retail sales had tumbled in October, as a closely watched gauge of household sentiment also fell.
However, the data did boost traders' expectations of an interest rate cut next month from the Bank of England. Markets are currently pricing in nearly a 90% chance of a 25-basis-point easing.
Elsewhere, the pound was down 0.2% at 88.06 pence per euro but was firmer against a weakening yen as traders watched for any signs of official buying from Tokyo to stem the slide in the Japanese currency.
Sterling was last up 0.2% at 205.22 yen, after last week rising to its highest since July 2024.
Reporting by Ozan Ergenay in London Editing by Alun John and Gareth Jones
Source: Reuters