U.K. mini budget

maisiesdad wrote:

Sage wrote:Well everyone's personal circumstances are different. Those that are moving house are very happy as the SDLT is reduced, those with mortgages are not so happy. Some of us, me included, are virtually unaffected. In Spain, amongst the expat community, it seems there is quite a lot of dislike, not only for the Tories but most things about the UK.

Some of us are indeed lucky, but that does not disguise the fact that successive lying, inept tory govts over the last 12 years have taken the UK to the brink of ruin. What people dislike is what the tories have and are doing to our country.

Most of us have NOT been lucky.

They have worked hard all their life, they have put money aside for pensions when the money would have been really useful. They have invested carefully where others have "invested" on the next horse race, we went without so we could pay for stuff we wanted and didn't owe thousands on the never never.....

No, not all of us have been lucky, many have worked damned hard for what we have and are annoyed when the rich fat cat Tories do things that cost us our hard earned money..

Well said

Now

The pound has already recovered to above what it was just before the mini budget. Its now back to the BOE to do their bit and raise interest rates in line with the financial market expectations and not keep dithering. If they do, the pound is likely going to fully recover.

But what about the 65 billion the BOE used to stabilise pension funds. For heaven's sake how can someone who costs the British economy so much still be in a job. It beggars belief.

But it was the BOE only raising interest rates by 0.5% that crashed the pound. The big sell off started before the mini budget.
This was made clear by the international financial markets.
This initial crash was caused by the BOE, not the mini budget. The mini budget didn't help and made it temporarily worse, but the main culprit was the BOE.

Hi..would I be right in thinking that the BOE is responsible for Monetary policy and the Government is responsible for fiscal policy...Knowing that is correct was it the monetary (BOE) or the Fiscal policy (Government) that crashed the markets. For heaven's sake even Truss agrees that is was the fiscal policy that spooked the market.

Look at the dates and timing. The pound started its sell off after the BOE interest announcement. This was before the mini budget.
It crashed further after the mini budget, but was already in freefall at that time.
So I still say that the BOE caused the crash, then the mini budget further spooked the market due to a lack of detail on how the tax cuts would be funded. As more is explained, coupled with the U turn on the 45p tax, the pound is back over 1.15

Just a warning on the market outlook for the pound

Quoting
Michael Brown at Caxton - Daily Market View (commentary).
“ ……looking under the surface a little, markets have never been more bearish on the pound. One-year cable risk reversals (a measure of the difference in implied volatility between puts and calls, which can be used to gauge sentiment) have fallen to their lowest on record, implying the most pessimistic year-ahead view since Bloomberg began to collate the data in the mid-2000s”

It’s technical, I take no pleasure in it, but there are difficulties in the market ahead.
One of the main reasons is that the FX market anticipates that the US Fed will remain “hawkish” (inclined to raise US rates) and that BoE (and the ECB) will be more reluctant to raise their currency’s interest rates.