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Wednesday, December 07, 2022

British pound pulls back against euro on easing UK fiscal crisis

British pound pulls back against euro on easing UK fiscal crisis

Pound Sterling fell again after a strong rebound against on Thursday Dollar Overnight, the Bank of England announced unlimited bond purchases to boost UK financial markets by sweeping government plans to cut taxes.

The UK currency on Wednesday posted its biggest gain since mid-June, dragging the euro with it, after the BoE conducted its first emergency bond buyback of more than £1 billion. He promised to buy as many long-term gilts as needed by October 14.

Notably, the pound was down 0.51% at $1.08 by 1200 GMT, part of the previous session’s 1.41% rally. The euro weakened 0.32% to $0.97 after Wednesday’s 1.51% gain, its biggest since early March.

The pound fell to a record low of $1.0327 on Friday as investors delivered a scathing verdict on the new government’s plan for record tax cuts financed by a massive increase in borrowing, at the same time the Bank of England is aggressively pushing monetary policy. is increasing. Control runaway inflation.

“BoE bond purchases may reduce UK government borrowing costs, but have not resolved tensions between fiscal easing and monetary tightening,” Commonwealth Bank of Australia strategist Carol Kong said in a note to clients.

The US dollar index, which measures the greenback against the British pound, the euro and four other major pairs, rose 0.07% to 113.11, reversing the direction from Wednesday’s 20-year high of 114.78.

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