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The pound to dollar exchange rate (GBP/USD) trades just below 1.34, pressured by a renewed bout of U.S. dollar buying.
Analysts say a rise in the dollar-yen exchange rate - on the back of the confirmation of Sanae Takaichi as Japan's new leader - is driving a portion of that dollar demand across the strip.
Japan's Nikkei has surged to record-breaking levels, pressuring the yen and broadly boosting the dollar on the crosses, since Takaichi secured a coalition partnership with the right-wing Japan Innovation Party.
"I think the Takaichi trade will continue. The Nikkei will continue to rally and the yen will continue to depreciate," says Tohru Sasaki, Chief Strategist at Fukuoka Financial Group.
Lingering USD demand stemming from USD/JPY can keep the GBP/USD pair capped at 1.34 for the short-term, which is also where the descending 100-day exponential moving average (EMA) can be located.
Domestically, UK borrowing figures for September showed another overshoot, but there was some relief for the pound as borrowing for previous months was lowered.
UK public sector net borrowing in September was reported at £20.2BN, lower than the £20.8BN median expectation of economists polled by Reuters.
The figure effectively meets the Office for Budget Responsibility's (OBR) forecast for the month.
Helpfully, the central government net cash requirement came in at £15.9BN.
Above: Broad USD strength (dollar index, lower panel), pressures GBP/USD.
However, it was a revision to VAT revenue that was the headline feature of this month's borrowing data as a previously announced VAT collation error was corrected.
The adjustment knocks the overshoot in spending at this point in the year to a £7.2BN overshoot.
Since the new financial year, which began in April, the government has incurred a deficit of £99.8BN
"While the profile marks a deterioration compared to last year still, it is hard to see any real deterioration in the trend over the past few months now, with both the revenue and spending side performing broadly in line," says a response from Lloyds Bank.
"That ought to cut some slack for Reeves, particularly thanks to the narrowing of the cash requirement which is the more important metric for the Gilt market. Where the OBR’s assumptions for the year look rather more optimistic is in the later months and those will be post-budget, so a profile that won’t provide any trip ups for now," adds the note.
The pound is the third-best performing currency of the past month, suggesting it has absorbed as much of the anxiety over the looming budget as it can.
Analysts point to excessive downside positioning in the market as another reason for the currency's resilience, suggesting the currency now looks better insulated into the November 26 event, opening the door to GBP/USD outperformance when the dollar finally pulls back from it's multi-week rebound.
"We expect GBP to trade well over the coming weeks," says a currency strategy note from Morgan Stanley, released Monday.