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Title: GBP/USD steadies above 1.1300 as bulls await UK PM Truss, US data

October 14, 2022 12:26 AM ET

By: AnalysisWatch

GBP/USD is hovering around the 1.1330 level, ending a two-day uptrend as buyers await key early Friday catalysts in Europe.

The previous day, the cable pair posted its highest rise in two weeks amid broader weakness in the U.S. dollar and headlines about the U.K.'s mini-budget and tax cut plans. However, fears that UK politics could remain unsettled and negatively impact Bank of England (BOE) decision-making seem to be weighing on GBP/USD prices lately.

The Financial Times (FT) reports that UK Chancellor of the Exchequer Kwasi Kwarteng has left Washington early to deal with the country's economic crisis, while Prime Minister Liz Truss prepares to tear up the government's "mini" budget in a desperate attempt to restore market confidence and save her nascent premiership. "Expectations are growing in London and in financial markets that he (Kwarteng) will shortly announce a U-turn on the £43 billion package of unfunded tax cuts he unveiled in his "mini" budget late last month," writes the FT.

In addition, a Bank of England (BOE) report and comments from International Monetary Fund Managing Director Kristalina Georgieva call for GBP/USD prices to be put into question. A BoE report said central counterparties (CCPs) in the U.K. financial system were "resilient," but that there were wide variations after the first public stress test of ICE Clear Europe, LCH and LME Clear, "Reuters reports. Reuters reports that the IMF's Georgieva chided the U.K. government over its planned tax cuts, telling the finance minister and the head of the central bank that their policies should not be contradictory.

Furthermore, the U.S. dollar index (DXY) remains under pressure despite the recent rebound from the intraday low around 112.40 as traders fear another false alarm triggered by the U.S. consumer price index (CPI). On Thursday, the U.S. consumer price index slipped for the third straight day, while the core CPI rose to a fresh 40-year high on a year-over-year basi

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