GBPUSD was lower after the latest budget from the UK government.
An increase in the energy windfall tax on oil companies was one of the headline proposals to balance the books.
GBPUSD – Daily Chart
The GBPUSD was trading above a price channel, and the latest move could see it slip back into reversal territory with the support at 1.16 and then 1.13.
The release of a budget from new Chancellor Jeremy Hunt sees millions of Britons facing higher taxes and energy bills as the government aims to restore its economic credibility.
Hunt protects the most vulnerable by fundraising for key public services such as health and education, even as he added 55 billion pounds in tax increases and spending cuts.
He admitted this was a “substantial tax increase,” with higher taxes on top earners and businesses. Inflation was also part of the manifesto, with a plan to spend billions of pounds to help consumers pay energy bills and increase welfare and pensions to match price rises.
After facing pressure to target the enormous profits of oil and gas companies to help support struggling Britons, the government hiked its windfall tax from 25% to 35%, effective from January 2024 to March 2028.
The latest budget was designed to restore economic and political standing after former Prime Minister Liz Truss tried to push through 45 billion pounds in unfunded tax cuts. The proposal rattled the bond markets and sent the British pound to record lows versus the US dollar.
Hunt added that the UK faces “unprecedented global headwinds.”
“It is a balanced plan for stability, a plan for growth, and a plan for public services. It shows that you don’t need to choose either a strong economy or good public services”.
The latest retail sales release boosted the US economy yesterday, which saw a better-than-expected increase in sales to 1.3%. The previous month had flatlined at 0%, and analysts expected 1% growth.