Skip to Content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.



Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events


Economic Calendar

Economic Calendar Events

Free Trading Guides
Please try again
More View More
Sterling Latest: Kwarteng Announces Tax Cut U-Turn, GBP Turns Higher

Sterling Latest: Kwarteng Announces Tax Cut U-Turn, GBP Turns Higher

Richard Snow, Analyst

Sterling (GBP) News and Analysis

  • Pound Sterling lifts on UK tax cut reversal
  • GBP/USD attempts to recover recent losses but fundamentals remain weak
  • Major event risk: Tory party conference, US PMI data and non-farm payrolls (NFP)
GBP Forecast
GBP Forecast
Recommended by Richard Snow
See What our Analysts Forecast for Q4
Get My Guide

Pound Sterling Lifts on UK Tax Reversal

The UK government, led by Liz Truss announced a remarkable reversal of the planned tax cuts for the UK’s highest earners this morning. The tax cuts were just part of a wholly unconventional fiscal policy announced by the chancellor on Friday the 23rd of September that resulted in a massive loss of confidence in UK assets and the current government as the pound plummeted and UK gilts sold off at an alarming rate.

The optics surrounding tax cuts for the rich while refusing to commit to increasing welfare benefits in line with inflation has played right into the Labor party’s hands as recent polls suggest a widening preference for Labor leadership. The decision to reverse the tax cuts, no doubt the result of pressure from the conservatives, resulted in a slight lift in the pound as the local currency attempts to recover lost ground.

GBP/USD 30-Minute Chart


Source: TradingView, prepared by Richard Snow

The daily chart reveals what looks like indecision around levels witnessed shortly after Finance Minister Kwarteng revealed the mini-budget on the 23rd of September as prices plummeted. However, the doji candle would need to persist into the daily close as there is still plenty of time in the trading session for subsequent price movement.

Price action has come a long way since the massive drop towards 1.0340. If further revelations about policy reform make their way to the news wire, we could see cable push toward today’s high at 1.1282 and even the descending trendline which connects multi-month highs.

However, when observing sterling, the market is extremely reactive to news flow at the moment meaning a move lower cannot be ruled out, particularly if Liz Truss remains resolute on other aspects of the recent fiscal proposals. 1.1110 appears as near-term support followed by the very distant 1.0547.

GBP/USD Daily Chart


Source: TradingView, prepared by Richard Snow

Main Risk Events of the Week

Front and centre will be revelations coming out of the Tory party conference with Kwarteng speaking this morning and Liz Truss having her turn on Wednesday. Also on Wednesday, we have September services PMI data for the US where the figures are anticipated to show a slight drop but still remains in expansionary territory (above 50). On Friday we have US non-farm payroll (NFP) data once again, where the jobless rate is assumed to remain at 3.7% and another 250k jobs being added. If US data continues the uptrend, this allows more room for the Fed to tighten aggressively – weighing on cable over the medium term.


Customize and filter live economic data via our DaliyFX economic calendar

Trade Smarter - Sign up for the DailyFX Newsletter

Receive timely and compelling market commentary from the DailyFX team

Subscribe to Newsletter

--- Written by Richard Snow for

Contact and follow Richard on Twitter: @RichardSnowFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.