Tax rises, BOE policy and Pound- GBP/USD edging higher this morning

There is little doubt that significant tax increases are soon to impact UK citizens. As to how much by remains to be seen, but everyone this analyst speaks to in that regards is braced for bad news. Now more traditionally, when large tax rises take hold they would be accompanied by a lowering of interest rates to help soften the blow. The BOE will next decide on monetary policy later this month, on September 19 and hence well in advance of the October 30 budget, when those Tax hikes are widely expected. The new Labour government was voted in partly on the promise of growing the economy. Well, if they smash the public too hard with higher taxes you can forget all that phoney rhetoric. So, the Pound versus the dollar has performed well recently and it is still holding the upper ground in terms of its 2024 range, but clearly doubts going forward remain. If the BOE passes on September 19, then perhaps another attempt to push above the 2022 high (1.3298) might ensue. We shall see. Meantime, the GBP/USD is still taking advantage of relative dollar weakness and edging higher, just above 1.3150 this morning, but the gains do look hard fought all the same