The government’s new budget is still to convince investors

GBP

Sterling fell to record lows against the US dollar, this morning, following last week’s announcement that the UK government were set to introduce new tax cuts and incentives to boost the economy. The pound already suffered significant losses on Friday as the market digested the new proposal. The £45bn debt financed package will be the biggest set of tax cuts in fifty years, a plan that has split Tory MP’s. Following this announcement, markets heavily sold Sterling as they bet the UK government will be unable to finance its debt burden moving forward.

The falling pound comes alongside rising debt costs following the government’s package to tackle rising energy prices. In addition, the Bank of England delivered their latest interest rates decision last week. A dovish move, to say the least – the central bank delivered a rise of 50 basis points, lower than that of its American and European counterparts. The bank has been criticised for being too slow to react and last week’s decision cemented investors’ thoughts.

According to analysts, rising debt and rising interest rates are a recipe for disaster. Investors now await the BoE’s next move. With Sterling hitting new all time lows against the dollar, the bank is expected to intervene before the next policy meeting in November. Reports now circulate that the bank may make a move this week to take action.

Key announcements

13:00 – EUR – President Lagarde Speech