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Sterling slipped 0.11% to $1.3314 and the euro fell 0.31% to $1.1203, its lowest close-equivalent level since Oct. 14, as AI-driven stock market jitters pulled U.S. rate expectations lower and called the dollar's safe-haven status into question. According to ING, the two-year U.S. OIS/SOFR rate has dropped 25 basis points since the Oct. 14 CPI print, moves ING's Francesco Pesole attributes almost entirely to AI concerns rather than macro factors. ING still sees a December Fed hike as a likely outcome and says the dollar index could return to 101 in the coming weeks. The euro also faces pressure from French protests, with the 10-year OAT-Bund spread hovering around 135-140 basis points.

According to the Telegraph, Chancellor John Healey is considering taxing business owners' income when they pass companies to their children, a change that could nearly double their tax bill. Currently, some transfers are structured to attract capital gains tax at 24 per cent rather than income tax at 45 per cent, and the plan would close this route. Accountants warn it could push many family businesses toward 'extinction' and deter new firms. The move comes ahead of Healey's first Budget on 28 October, which faces a £35bn black hole flagged by the IFS, while headroom that stood at £23.6bn in March has shrunk. He is also reportedly targeting high-street banks and a new gambling machine tax expected to raise £500m, but has reportedly ruled out aligning CGT with income tax after investor concerns.

Chancellor John Healey is reportedly considering raising the surcharge on bank profits above £100million from 3% to 8% at the upcoming Budget, reversing a cut introduced in April 2023 under Jeremy Hunt. The change could raise some £2billion for the Exchequer, but banks warn it could inflict a £20 billion hit on the economy. Lenders may try to recoup the cost by raising mortgage rates and cutting savings rates, though that risks losing customers to rivals. Conservative and City groups say the tax would stifle investment and harm Britain's competitiveness, while the TUC backs it and estimates it would raise £2.25billion a year. The Treasury said decisions on tax are for the Chancellor to announce at fiscal events.

Farmers have urged UK Prime Minister Andy Burnham to fully scrap the inheritance tax on farms introduced under Sir Keir Starmer's government, warning it threatens family farms. The threshold was raised to £2.5 million (£5 million for married couples) after a backlash, but farmers say tax bills can force families to sell land and make farms unviable. Sandy Wade-Gery, 76, whose Bedfordshire farm has been in his family since 1536, fears his son may be the last to keep it unless the tax is abolished. The Countryside Alliance and NFU also oppose the tax, while the Conservatives and Reform UK have pledged to reverse the changes if they win the next election. Further changes are speculated for next week's budget as Mr Burnham seeks to repair ties with farmers.