Pound recovers losses as Bank interventions boosts confidence
The pound has recovered much of its losses against the dollar this morning as moves by the Bank of England in recent days helped calm the fallout of Kwasi Kwarteng’s tax cutting mini budget last week.
Sterling rallied 0.8 per cent on the dollar to $1.203 after the market opened in Asia early this morning, pushing the value back to levels seen before Kwarteng sent the value of the pound plummeting last week with £45bn tax cuts.
The pound has continued its rise and is currently trading at around $1.117 as of 9:37am.
Analysts said today Threadneedle Street’s move to step in with a £65bn bond-buying programme to steady gilt markets, as well as a decision by the Office for Budget responsibility to bring forward its assessment of the government’s economic plans, had boosted confidence.
“The BoE actions in the gilt markets and the OBR coming forward with a more timely assessment of the economic forecasts have given markets a short-term confidence boost,” Mansoor Mohi-uddin, chief economist at Bank of Singapore, told the Financial Times.
The Prime Minister and Chancellor are due to meet with the independent Office for Budget Responsibility today before the watchdog presents a first draft of its full fiscal forecasts next week.
The FTSE 100 index also rose one per cent morning after a rocky week and is currently up 0.7 per cent as of 11:14am.
Today marks the final day of a torrid third quarter for London’s markets, with firms on the flagship index trading down on average three per cent, according to Hargreaves Lansdown.
“Markets peaked in mid-August, and if you measure the declines from then, the FTSE100 is down around 9.0% and the FTSE250 has lost a thumping 17 per cent,” Steve Clayton, Fund Manager at HL Select said this morning.