GBP: weak dollar and taxation. Overview for 21.11.2023

The British pound sterling, paired with the US dollar, is actively appreciating. The current GBPUSD exchange rate stands at 1.2532.

On one hand, the GBP is supported by a weak US dollar and swiftly regains its position.

On the other hand, domestic news is also providing certain support. UK Prime Minister Rishi Sunak has announced tax reductions in response to easing inflationary pressure in the country. The finance minister is expected to present the first proposals this Wednesday.

As Sunak noted, inflation has halved, and economic growth has strengthened, allowing for optimism regarding increased revenues. Consequently, some taxes can be waived. While taxes cannot be lowered instantly, the UK authorities intend to act with discipline to prioritise necessary measures.

Based on October's results, annual inflation in the UK slowed to 4.6%, down from 6.7% in September. The decrease in the CPI below 5% signifies the fulfilment of one of Sunak's five pledges to the citizens of the UK. The remaining four involve reducing the national debt, developing the economy, improving conditions in the healthcare system, and actively combating issues related to illegal immigration.