GBP/USD: UK PM is sticking to her fiscal plan, not a good signal for sterling – Commerzbank

Prime Minister Premier Liz Truss’ press conference on Friday was quite bizarre. Economists at Commerzbank believe that the newly appointed Prime Minister (PM) will not be able to calm markets.

New Chancellor adds strength to sterling, but it is not enough

“The British chancellor has been dismissed; his successor does not have a reputation for being similarly radical. That sounds like good news for sterling. But that is not enough.”

“Truss’ plan will not work out anyway if the market does not believe that it will work out. Hardly anyone believes in this type of ‘supply-side economics’ (another anachronism).”

“It makes little difference that a large share of the tax cuts she announced will be taken back. What Truss said on Friday sounded more like the plans being postponed rather than abandoned. And as a result, it is not suited to regain market trust in the long-term sustainability of British fiscal policy.”