Pound slips after Truss and Kwarteng meet fiscal watchdog

LONDON, Sept 30 (Reuters) – The pound fell on Friday, reversing earlier gains, after Prime Minister Liz Truss and Finance Minister Kwasi Kwarteng met Britain’s fiscal watchdog and confirmed that markets should wait until the November 23 for new economic forecasts.

Truss and Kwarteng refused to bow to requests to release earlier forecasts of the government’s growth plans and the impact of planned tax cuts that have caused turbulence in financial markets this week. Read more

During a volatile session, the British currency fell 0.75% to $1.1036 at 11:52 GMT, after hitting a one-week high of $1.1235 earlier, sending the has moved closer to erasing all major losses following the new government’s budget plans announced last time. Friday.

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Britain’s finance ministry said in a statement after the meeting with watchdog the Office for Budget Responsibility (OBR) that independent economic and fiscal forecasts would be released on November 23. read more

The Conservative government has come under fire for not ordering the OBR forecast alongside last Friday’s budget plan, which rocked markets by announcing deep debt-funded tax cuts.

Earlier, in a reversal from record lows the pound hit on Monday, and helped by the Bank of England’s emergency bond buying, the UK currency hit its highest level in a week . It was still heading for its biggest weekly rise since late 2020.

Chris Turner, head of markets at ING, said the government was not out of the woods yet.

It “still needs to find a way to balance the books and avoid a very negative assessment from the ratings agencies,” Turner said.

“A Conservative Party conference this weekend suggests it is far too early for a reversal in fiscal policy and, combined with a very challenging external environment, the pound should remain vulnerable,” he added.

Facing a weakened euro, hit by record eurozone inflation, the pound hit a week-long high before paring some of those gains, and was last up 0.1% at 88.35 pence. Read more

BOE INTERVENTION

On Thursday, the pound jumped 2.13% as the Bank of England (BoE) carried out a second day of bond buying to stabilize markets, pushing gilt yields higher.

Truss vowed to stick to his budget plans on Thursday, in his first comments since market turmoil erupted. Read more

For the BoE, traders expect an interest rate hike of 125 basis points at its next meeting in early November.

In another sign of the economic slowdown caused by a cost-of-living squeeze and rising interest rates, UK house prices failed to rise in monthly terms for the first time since July 2021, the Nationwide mortgage lender. Read more

But UK lenders approved far more mortgages than expected in August. Read more

Friday’s data showed Britain’s economy grew unexpectedly in the second quarter but was below its pre-pandemic peak, contrary to an earlier estimate that it had recovered. Read more

Another indicator, released by the Confederation of Recruitment and Employment, showed UK job vacancies fell to their lowest level since the COVID-19 pandemic last week, a sign of a further weakening in the job market. labor market. Read more

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Reporting by Joice Alves; Editing by Frank Jack Danie and Mark Potter

Our standards: The Thomson Reuters Trust Principles.

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