Pound plunges to record low, UK 10-year gilt yields rise above 4%, Meloni declares victory for far right in Italian election
September 26, 2022
GBP/USD 1.0752 GBP/EUR 1.1105 EUR/USD 0.9682 USD/CAD 1.3589 EUR/CHF 0.9544 EUR/SEK 10.9165 EUR/NOK 10.3065 EUR/DKK 7.4367 USD/ILS 3.5152 AUD/USD 0.6518 NZD/USD 0.5735 USD/SGD 1.4337 USD/JPY 143.81 USD/CNH 7.1529 USD/INR 81.5938 EUR/ILS 3.4037 GBP/ILS 3.7794 USD/ZAR 18.0254
The pound plunged over 4% through the Asian session, collapsing to record lows of 1.035 during this morning against the dollar. The sell-off in the pound follows the chancellor’s announcement of his ‘mini-budget’, which promised tax cuts and energy support. The government’s plan is aimed at generating growth; however, markets have judged this as fiscal irresponsibility, stressing public finances.
The pound currently trades within the mid-1.07, with GBPUSD seeing high volatility. The UK 10-year gilt yield rose over 4.2% this morning, raising borrowing costs. Markets are currently pricing in a 1.13% interest rate hike as the Bank of England attempts to curb inflation despite the stimulus from Westminster. Expectations of an emergency interest rate rise have increased.EUR
Giorgia Meloni has declared victory in the Italian election, becoming the first Italian government to be led by the far-right since the second world war. Meloni is set to become Italy’s first female prime minister. Her coalition won just over 43% of the vote. Exit polls suggest that the party will fall short of the 2/3s majority required for any constitutional changes.
The euro fell through the Asia session as investors weigh on the prospect of Italy’s new government, it has since recovered losses and trades flat intraday.USD
Jerome Powell refused to rule out a recession in the world’s largest economy as the Fed implemented its third consecutive 0.75% hike. Last week the Fed rose rates to 3-3.25%, the doggedly hawkish Fed have continued to bolster the dollar, as the greenback continues to surge against global currencies. The dollar rallied as the pressure builds on risk sensitive assets.ASIA/PACIFIC
Typhoon Noru hit the Philippines main Luzon Island, leaving millions of people without electricity. Markets were closed as a result.
Former statistics bureau chief, Ning Jizhe has said that national and local governments in China need to strike a balance between covid controls and growth, to stimulate demand.ILS
Israeli markets are closed today for the Jewish New Year, Rosh Hashanah.
USDILS trades higher just above 3.5Data & Events
Germany Sept IFO business climate
Several ECB Speakers
Italian election results confirmed
French Budget announcement.
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