Sign up to create alerts for Instruments,
Economic Events and content by followed authors
Free Sign Up Already have an account? Sign In
Witur Seno
Sep 03, 2022 1:09AM ET
1.400
1
0
Quotes
All Instrument Types
- All Instrument Types
- Indices
- Equities
- ETFs
- Funds
- Commodities
- Currencies
- Crypto
- Bonds
- Certificates
Please try another search
🚨 NDVA surged 43% - these 3 AI stocks could be next Start Free Trial
Sterling on Course for 2-Year Low as Truss Closes in on Leadership Victory
Published Sep 02, 2022 10:59AM ET
Updated Sep 02, 2022 11:36AM ET
© Reuters
By Geoffrey Smith
Investing.com -- The British pound is set for its lowest weekly close in over two years against the dollar, as the ruling Conservative Party prepares to elect a new leader to replace outgoing Prime Minister Boris Johnson.
By 11:30 ET (15:30 GMT), the pound was trading at $1.1579 against the dollar, enjoying a modest bounce in risk appetite in the wake of a U.S. employment report that took a little pressure off the Federal Reserve to continue raising interest rates aggressively.
Widening interest rate differentials have been one of the biggest reasons behind a miserable couple of months for the pound, with the Bank of England's more gradual steps so far failing to compensate for the downward pressure on the currency from an increasingly acute balance of payments problem caused by the energy crisis. The U.K. is a big net importer of energy, and the sharp rise in oil and gas prices this year has negatively affected its terms of trade, pushing the country to record current account deficit in the first quarter.
That current account deficit is likely to be complemented by a widening budget deficit if Foreign Secretary Liz Truss - the overwhelming favorite according to opinion polls - wins the membership's vote when the result is announced on Monday.
Truss has ruled out raising taxes if she becomes Prime Minister, and has promised to reverse a planned increase in National Insurance contributions which Johnson drafted to help tackle the rising costs of social care. At the same time, she has made numerous promises on spending - not least to help households with their energy bills over the coming winter.
Truss has also promised to raise defense spending to 3% of gross domestic product by 2030, the equivalent of 157 billion pounds in additional spending over the next eight years, compared with current planning assumptions, according to the Royal United Services Institute. In a research note, RUSI estimated that this would require a 5 percent increase in the standard and higher rates of income tax by the end of the decade, or an increase in the standard VAT rate from 20% to 25% if the government wanted to avoid higher borrowing.
The yield on the 10-year benchmark U.K. bond, or Gilt, rose another 7 basis points on such prospects Friday to a new eight-year high of 2.95%.
Related Articles
Comments (3)
shan malik
Sep 03, 2022 1:09AM ET
1.04 or 1.40 in dream
0
0
Lucky Nwankwo
Sep 02, 2022 12:45PM ET
I'm upset
1
0
Sidney Glover
Sep 02, 2022 12:06PM ET
the job report is mixed and means nothing for inflation stop writing nonsense. stocks rising is nonsense too
4
1
Add Chart to Comment
Confirm Block
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
Report this comment
I feel that this comment is:
Comment flagged
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.