PM Sunak is reconsidering tax rises

The UK’s Telegraph reported in an article that Rishi Sunak is reconsidering tax rises and major public spending cuts after a dramatic improvement in the state of the nation’s finances.

”The new Prime Minister on Wednesday delayed the medium-term fiscal statement from next Monday to November 17 to allow Jeremy Hunt to rework the plans.

An analysis to be published on Thursday shows that the fortnight delay is expected to shrink the size of the black hole in the public finances by up to £15 billion,” the article reads.

”With the interest rate paid on government gilts falling rapidly – and the international gas price reducing – there is growing confidence in Downing Street that more minor changes to the public finances may be necessary.

Mr Hunt had previously warned that “some taxes will go up” while others “will not be cut as quickly as people want”, with high earners to be reportedly targeted with up to £20 billion of tax rises. Whitehall departments have already been told to find savings of from 10 to 15pc each.

But the improving economic picture means Mr Sunak is now examining whether some of the sweeping measures drawn up for the Hallowe’en statement can now be watered down or cancelled altogether.

The delay means that the Bank of England will now set interest rates on November 3 without knowing the new taxation and spending policy.”

This news comes in the tailwind of a political overhaul in the UK following weeks of turmoil at No 10 Downing Street and UK financial markets where the contagion rocked the fixed income and forex space. 

GBP/USD has been whipsawed but the recent appointment of the Sanuk stabilised the currency that has fully capitalised on the US dollar weakness this week:

However, it is now up against critical resistance and the W-formation is a reversion pattern. We could expect to see a retracement into the neckline that meets a 38.2% Fibo near 1.1350 if the bears commit below the daily trendline resistance.