The pound rose to a nearly two-week high on Tuesday, helped by the UK government’s sharp reversal of controversial tax cut plans.
The pound rose 0.08% to $1.1333, about 10% above the record low against the dollar seen last week after Chancellor Kwasi Kwarteng’s mini-budget announcement to lift the highest income tax rate with a cut. financed by increased borrowing.
Mr Kwarteng’s promise to abolish the 45p tax rate paid by people earning more than £150,000 a year was met with strong opposition from the opposition and an uprising among Conservative MPs who threatened to vote against the plan, saying that it unfair against the backdrop of a cost-of-living crisis.
“We understood that and listened,” Mr. Kwarteng said of canceling the plan to cut the 45 percent tax band.
Prime Minister Liz Truss admitted she didn’t have an “easy” week in an article for Tuesday. To express newspaper, but said it was sticking to the rest of the tax cut package, which it insisted was “necessary to move the British economy”.
The pound began to recover on Monday when the government finally decided to remove some tax breaks, with the pound gaining more than 1% in the foreign exchange market on Monday.
After Asian deals on Tuesday, the pound hit its highest level against the dollar since September 22.
The pound’s rise is also partly due to the dollar’s weakness as the index fell against other major currencies for a fourth straight day on Monday and continued to trade at lower levels on Tuesday morning.
The dollar’s fall was caused by a decline in Treasury bond yields after the benchmark index reached its highest level in two decades.
The U.K. government’s reversal also boosted Asian equities, which rebounded as global sentiment improved as a deeper drop in British assets was avoided.
Growth was observed despite the decrease in trading volumes due to holidays in China and Hong Kong. The broadest MSCI index of Asia-Pacific equities outside of Japan rose more than 2 percent by noon.
The Australian central bank’s decision to surprise investors with a 25 basis point less-than-expected rate hike also helped stocks but dragged the Aussie down.
Credit: www.independent.co.uk /