GBP/USD jumped on Monday amid news from the UK that the economic course presented by Prime Minister Liz Truss would be stopped. This was after Finance Minister Kwasi Kwarteng announced his resignation last Friday, as well as on the inability of Truss to convince markets that the decision to significantly ease fiscal policy will have a beneficial effect on the local economy.
Pound got off to a solid start after it was revealed that the new finance minister, John Hunt, will present excerpts from his medium-term budget plan this afternoon. It seems that the market is hoping for some kind of compromise between the need to save the economy with regular infusions of unsecured money, and the need to take a tough course of savings.
What is currently observed in the market can be explained by the closing of a large number of short positions in pound. And with the uncertainty factor looming ahead, as well as the significant deterioration in the economic situation in the UK, it is highly likely that prices will continue to collapse, especially if new measures from the new finance minister are unlikely to provide significant and long-term support for the local currency. Dollar also has a huge advantage being a strong safe-haven currency.
Summing up, it is likely that the growth of pound will be limited.
Forecasts for today:
GBPUSD
The pair is highly likely to be volatile today and would trade in the range of 1.1060-1.1370.
AUD/USD
The pair is also consolidating in the range of 0.6200-0.6350. But in the future, it will exit this range and go down to the level of 0.6150.