UK fiscal report delayed, economy slowing faster than rate hike

Recent forecasts from the Bank of England warn that the recession could last up to five quarters. The economic downturn in the coming months is likely to deepen further if Sunak's new government goes ahead with widely expected cuts to public spending in an effort to balance the country's finances.

Britain's economy is slowing faster than the Bank of England and other forecasters expected last quarter, which could mark the start of a recession. The UK government has been committed to a more frugal approach to the country's finances, which is one reason why Tuesday's election of Sunak could have a big impact on the outlook for the economy in the months and quarters ahead.

UK PM Sunak Spokesman: The Northern Ireland deal bill will pass Parliament at the same time as negotiations with the EU, the PM will work on a moratorium on fracking, the PM wants to see a drop in net migration, as stated in the 2019 manifesto, in fiscal 2019 Discussions with Chancellor of the Exchequer Hunt on the measures will not be prejudged before the plan is announced.

Interest rate futures point to a roughly 35% chance of a sharp 100 basis point hike by the Bank of England on Nov. 3, compared with 30% earlier this week, and a 65% chance of a 75 basis point hike. The fiscal announcement could have a big impact on the outlook for gilt sales in the months and years ahead, with the plan expected to shed light on how the government will fill the budget gap.

The fiscal report was due to be released on Monday, but Hunt postponed it until November 17, which means the Bank of England will not be able to factor fiscal plans into its economic forecasts. Yields on British government bonds rose on Wednesday as Chancellor of the Exchequer Hunt delayed the release of the fiscal report, making it more difficult for investors and the Bank of England to judge the inflation outlook.

British Chancellor of the Exchequer Hunt: The first task is to restore economic stability. The accuracy of the forecast is "very important". The new timetable was discussed with the Governor of the Bank of England. Many changes over the past 24 hours have affected the forecast. Willingness to make politically embarrassing choices.

IMF Managing Director Georgieva said new Prime Minister Sunak is expected to lead the UK on a path to medium-term fiscal sustainability, adding that Sunak was right to warn the public of the difficult decisions ahead. A phone call with the new Chancellor of the Exchequer, Hunt, is expected in the coming days.

Hunter is widely expected to announce a series of spending cuts next year, in stark contrast to his predecessor Quatten. Quarten's ambitious "growth plan" based on deep tax cuts shook markets and led to the ouster of former Prime Minister Truss.

Stephen Gallo, head of European FX strategy at BMO Capital Markets, said he had to lower his expectations for a rebound in GBP/USD given the strength of the U.S. dollar and the overall picture around risk appetite; if GBP/USD is short-term A real move to the 1.15-1.17 range, which we see as a good short-term entry. We predict that the target range of the exchange rate at the end of the year is 1.08-1.12.

Dean Turner, chief U.K. economist at UBS Global Wealth Management, said: "The market reacted to Jensen's exit and Sunak's win with gilt yields falling sharply on the curve, while sterling traded lower against major crosses. Hold steady. A Sunak victory won't stop the political turmoil in the UK, but temperatures should drop significantly."

Adam Cole, chief foreign exchange strategist at RBC Capital Markets, said: "With the confirmation of the UK's next prime minister and Sunak marking a decisive shift in fiscal orthodoxy, the risk premium for sterling assets has compressed back to September 23 The prevailing level before the daily mini-budget created chaos."