Market Analysis

The pound claimed back some of the losses accumulated over the previous session


As Wednesday’s trading got underway, the pound claimed back some of the losses accumulated over the previous session. The markets have been caught between contradicting messages from the BoE; first a warning that support would end on Friday, and then private reassurances, reported in the press, that if needed the central bank would continue to act as buyer of last resort for gilts. The bottom line is that the mini-budget presented by the British government at the end of last month spooked the markets. It triggered a bond market rout that also weakened the pound. Whether or not the Bank of England continues to offer a safety net for the bond market, investors are likely to remain cautious. The UK government’s plans for an unfunded fiscal expansion is seen by most as an unorthodox and risky move. Therefore, it is likely to continue to cast a shadow over the country’s economic stability, keeping the pound under pressure.


Source: ActivTrader



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