The GBP/USD price held steady on Monday as investors focused on the measures that Lizz Truss has put to solve the recent challenges.
The UK economy has been in a difficult period after Chancellor Kwasi Kwarteng unveiled his mini-budget recently.As a result, the Bank of England has been forced to intervene in the market by buyibg long-dated government bonds. On Friday, the bank concluded its emergency bond-buying program and then created a new “Temporary Expanded Collateral Repo” facility that will run until November 2010.
Another big change is that Prime Minister Lizz Truss replaced Kwasi Kwarteng with Jeremy Hunt. In his initial statement, Hunt said that the government will still favor a low-interest rate environment. However, he said that he will repeal some of the main tax cuts that were unveiled by Kwarteng. The main challenge for Kwarteng’s tax cuts was that they were to be funded by more borrowing at a time when the country’s debt has surged. Therefore, Kwarteng committed to maintain a balance between borrowing and taxes.data that comes on Wednesday. These numbers are expected to show that the headline inflation rose from 9.9% to 10% while core inflation rose from 6.3% to 6.4%. UK’s inflation has been supported by the government’s support in the energy market.
The UK will also publish the latest retail sales data scheduled for Friday. Analysts expect that sales tumbled by another 5% in September after falling by 5.4% in August.The four-hour chart shows that the GBP/USD pair has made a strong recovery from its lowest level in September.
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