{"id":37539,"date":"2022-10-04T09:49:56","date_gmt":"2022-10-04T06:49:56","guid":{"rendered":"https:\/\/ironfx-com-php8.wp-dev.int.theitops.net\/?p=37539"},"modified":"2025-10-13T13:14:08","modified_gmt":"2025-10-13T10:14:08","slug":"daily-key-points-pound-rebounds-yet-uk-credibility-still-is-in-the-balance","status":"publish","type":"post","link":"https:\/\/www.ironfx-id.com\/ph\/daily-key-points-pound-rebounds-yet-uk-credibility-still-is-in-the-balance\/","title":{"rendered":"Daily Key points: Pound rebounds yet UK credibility still is in the balance"},"content":{"rendered":"

The pound continued to strengthen against the USD yesterday, yet the pound\u2019s strengthening is also clear against the EUR and JPY in a sign of broader strength for the sterling. Nevertheless, despite the strengthening of the pound, the credibility of the UK government is still low with the markets despite Prime Minister Truss performing a humiliating U-turn yesterday in regard to the possibility of scrapping a tax rate hike. Overall, the UK Government\u2019s plans to cut welfare and public spending in order to provide a tax cut to the richest was considered a giveaway and created turmoil in the markets as well as an outcry among UK citizens, thus increasing uncertainty also on a political level. On the other hand, UK finance minister Kwarteng is to bring forward the publication of the UK Government\u2019s plans to cut UK debt, in order to restore reliability among the markets, yet UK\u2019s credibility may well remain in the balance for now. Across the world the Aussie took a beating during today\u2019s Asian session as RBA proceeded with a 25-basis points rate hike as we had mentioned yesterday and disappointed Aussie traders. Overall, the bank\u2019s hawkishness in Governor Lowe\u2019s statement, seems to have eased as the bank stated that its intentions is still to curb inflationary pressures in the Australian economy yet also underscored that the outlook for the global economy is uncertain and has deteriorated. At the end the bank reiterated that \u201cThe size and timing of future interest rate increases will continue to be determined by the incoming data and the Board\u2019s assessment of the outlook for inflation and the labour market\u201d. During tomorrow\u2019s Asian session we note the release from New Zealand of RBNZ\u2019s interest rate decision and the bank is expected to proceed with a 50-basis points rate hike, as NZD OIS imply a probability over 70% currently for such a scenario to materialize. Even should the bank proceed with a 50-basis points rate hike as expected, for the Kiwi to get some substantial support, the bank may also have to adopt a hawkish, confident tone, while anything less could weaken NZD.<\/p>\n\n\n\n

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