Sterling briefly jumps after British government tax U-turn



*

Graphic: World FX rates in 2020 Link

*

Graphic: Trade-weighted sterling since Brexit vote Link

LONDON, Oct 3 (Reuters) - The pound briefly jumped on Monday on news Britain would reverse plans to cut the highest rate of income tax, one contentious part of a package of financial measures that last month sent sterling and British government bonds tumbling.

"It is clear that the abolition of the 45p tax rate has become a distraction from our overriding mission to tackle the challenges facing our country," finance minister Kwasi Kwarteng said in a statement.

The pound GBP=D3 rose as high as $1.128 after news of the U-turn was reported by the BBC, the currency's highest level since Sept. 22, the day before Kwarteng announced a new "growth plan" that would cut taxes and regulation, funded by vast government borrowing.

Sterling then gave up most of those gains and was last at $1.1177 up 0.1%.

The euro was down 0.27% against the pound at 87.61 pence. EURGBP=D3

"From a markets perspective, it is a good step in the right direction. It will take time for markets to buy the message but it should be ease the pressure, " said Jan von Gerich, chief analyst, Nordea

"Questions still remain and sterling will likely remain under pressure," he added.
Reporting by Alun John, editing by Ed Osmond

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.