Sterling strengthened over the course of yesterday against both the US dollar and euro by around 1%. This returned GBP/USD to where it was before the chancellor’s mini-budget of 23rd September and GBP/EUR to a two-and-a-half week high. It has continued to strengthen this morning.
The background to yesterday’s increase was the embarrassing reversal of the 45% tax cut by Kwasi Kwarteng on the first day of the Conversative Party conference following scathing attacks from his own backbenchers.
He has also promised to bring forward the larger economic plan, including how tax cuts are to be paid for, earlier than the 23rd November planned.
Final PMI readings for September showed a reversal of fortunes for German and British manufacturing PMI, with Germany’s dropping from 49.1 last month to 47.8 this month, and the UK’s going from 47.3 last month to 48.4 this month. This is also likely to have supported the pound.
As reported in the FT, various economists have downgraded the UK’s growth forecast following the mini-Budget whuch had been specifically intended to boost it. They include Consensus Economics, predicting a 0.3% decline in the economy in 2023.
In the US, Kim Kardashian has been fined $1.25m for promoting crypto currencies without revealing that she was being paid to do so.
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