Around 4:45 p.m., the British currency gained 0.92% to 1.1273 dollars following rising to 1.1292 dollars, a level not seen since September 22, the day before controversial and unquantified budget announcements.
The pound rose Monday for the fifth consecutive session once morest the dollar, taking advantage of a reversal of the British government on a controversial tax measure, while the greenback suffered from the slowdown in manufacturing activity in the United States.
Around 2:45 p.m. GMT (4:45 p.m. in Paris), the pound gained 0.92% to 1.1273 dollars following rising to 1.1292 dollars, a level more seen since September 22, the day before controversial and unquantified budget announcements.
The market’s concern over these measures had caused the pound to plunge to its all-time low at $1.0350 on September 26.
Monday morning, ten days following the initial announcement, Finance Minister Kwasi Kwarteng returned to one of the key measures, the abolition of the 45% tax rate for taxpayers with the highest incomes.
“It provides some reassurance to the markets that the more impulsive tendencies of this new administration can be moderated by the Conservative Party,” said Susannah Streeter, analyst at Hargreaves Lansdown.
Across the Atlantic, manufacturing activity in the United States recorded its weakest growth in September since May 2020, as new orders fell as companies anticipate an economic slowdown, according to the index of the professional federation ISM.
Information that might predict “a disappointing employment report on Friday,” notes Fawad Razaqzada, analyst at Forex.com.
The monthly jobs report, if it showed a weak labor market, might signal that the US Federal Reserve’s (Fed) stringency to bring down inflation is starting to weaken the economy, and thus push investors to bet on less marked rate increases in the future.
The euro took 0.13% to 0.9814 dollars. The currency had yet started the session in the red: “the energy crisis in Europe is growing,” said Fiona Cincotta, analyst at City Index.
The Russian giant Gazprom has completely suspended its gas deliveries for the day on Saturday to the Italian Eni, citing the “impossibility of transporting gas through Austria”, announced the Italian group on Saturday.
“This exacerbates concerns with the coming winter,” said Ms. Cincotta.
Finally, the yen recovered 0.15% to 144.52 yen per dollar following falling to 145.30 yen, approaching its lowest since 1998 reached on September 22 at 145.90 yen.
The Japanese currency had since risen a little, supported by government measures aimed at boosting the currency.
“On Friday, the Ministry of Finance announced that the intervention in the foreign exchange market had cost 19 billion dollars, but that was not enough to support the yen,” pointed out analysts at Sucden.