Pound Falls Despite Hopes Of U-turn On U.K. Tax Cut Plan
(RTTNews) - The pound slipped against its major counterparts in the European session on Friday, despite optimism over the likelihood of U-turn on tax cuts in the mini-budget by the U.K. government amid a turbulence in the markets.
There were reports on Thursday that Prime Minister Liz Truss is likely to make changes to the mini-budget that fuelled concerns about financial stability.
Chancellor Kwasi Kwarteng has shortened his trip to the US for discussions on the financial plans it presented last month.
Gilts and the pound moved up on Thursday on hopes that the government would reconsider changes to corporation tax.
Britain's trade department minister Greg Hands said that the Prime Minister and the Chancellor are committed to stick to the growth plan, contradicting reports that the government could change some parts of the fiscal plan.
The pound dropped to 1.1230 against the greenback and 166.02 against the yen, off its early highs of 1.1366 and 167.21, respectively. The pound is poised to challenge support around 1.10 against the greenback and 159.00 against the yen.
The pound reversed from its prior highs of 1.1345 against the franc and 0.8617 against the euro, weakening to 1.1241 and 0.8671, respectively. The pound may locate support around 1.06 against the franc and 0.88 against the euro.
Looking ahead, Canada manufacturing and wholesale sales for August, U.S. retail sales and import and export prices for September, University of Michigan's preliminary U.S. consumer sentiment index for October and business inventories data for August are set for release in the New York session.
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