Sterling, US fall near parity, British Prime Minister's tax cuts continue

GBP/USD extended losses to 4.5%, falling below 1.04, a record low. The Bank of England has not yet decided whether to issue a statement on market conditions. UK Prime Minister Spokesperson: It is important that the Bank of England remains independent and we do not comment on interest rates. The government's goal is to implement sustainable development in the medium to long term. Fiscal policy is set by the Chancellor of the Exchequer. Prime Minister Truss will also introduce more tax cuts next year.

Some in the market are already calling for urgent action by the Bank of England to stem the trend, but it is unprecedented in modern times and could fuel panic. Former U.S. Treasury Secretary and Harvard professor Summers bluntly said that Truss's leadership of the cabinet was "naive" and "created the conditions" for the pound to fall to parity with the dollar.

In a speech to the House of Commons, the newly appointed British Chancellor of the Exchequer Kwarten said: "We are committed to prioritizing the development of the economy, and we are committed to a new approach for the new era." He emphasized: "We believe that high taxes reduce work motivation and hinder Investment and business development. Lowering taxes is absolutely fair. The path we took before is unsustainable and we can’t keep raising taxes.”

The UK government estimates that through the above tax cuts, by 2026-2027, the total tax reduction will reach 45 billion pounds. Kwarten's announcement marked a major shift in UK financial policy. The UK Fiscal Institute said the scale of the tax cut surpassed those introduced under Mrs Thatcher in 1988 and was the largest since 1972. "We haven't seen a tax cut of this magnitude in half a century."

免費開通賬戶> > 入金最高送 $88

Bank of England Governor Bailey has faced mounting calls for him to intervene to calm markets. JPMorgan economist Allan Monks said emergency action was "unlikely" and called on Bailey to "deliver a decisive and tough speech by November to calm apparent nervousness in markets."

Fears are growing that underfunded tax cuts could lead to a downgrade of Britain's credit rating next month. Meanwhile, Quatten will meet with City executives on Tuesday morning to discuss how ministers are rolling out Big Bang 2.0. The chancellor will meet with executives from City insurers and asset managers to study the details of the deregulation move. However, senior sources have warned that if the government wants to increase foreign investment in the UK, Quarten needs to win the trust of financial markets.

Bank of Singapore chief economist Mansoor Mohi-uddin said global investors could be "spooked" by ballooning budget and current account deficits, which could spell a major crisis for the pound. Sterling could fall to record lows as investors fear Britain's debt is on an unsustainable upward path and refer to the pound as the "British peso". This could lead to an emerging-markets-style vicious cycle of rising inflation, rising yields and falling economic activity, leading to emergency spending cuts by governments and forcing the economy into a deep recession.

免費開通賬戶> > 入金最高送 $88

Danske Bank: It is expected that the UK will continue to raise interest rates by 50 basis points in the next two months; the Bank of England is expected to increase interest rates by 50 basis points in November and December, and finally raise interest rates by 25 basis points in February. No rate hikes are expected after the February meeting, although for now, a 25 basis point hike in March remains a certain possibility. Our expectations are lower than current market pricing, as the BoE may eventually become less hawkish on the back of weaker growth.

George Saravelos, global head of foreign exchange research at Deutsche Bank, said the Bank of England will need to raise interest rates sharply outside its normal decision-making cycle after a "historic decline" in sterling and gilts, with a hike as soon as next week to regain market confidence. Saravelos believes that the British Chancellor of the Exchequer boasted that the fiscal measures announced on Friday meant that the Bank of England needed to take extraordinary measures to calm market panic. Saravelos called on the Bank of England to send a "strong signal" that it is willing to do whatever it takes to bring down inflation quickly enough to bring real yields to positive levels.