British Sterling Heads for Best Week in Nearly 2 Years as Budget Worries Fade

The British pound was on track to have its best week since the year 2020 on Friday as policymakers took steps to undo market damage from last week’s tax cut and debt increase fiscal plan.

The sterling climbed to a new one-week high of $1.1222 at the start of the Asian trading day, nearly making up for all of the dramatic losses suffered after the new government’s so-called mini budget last Friday.

Despite falling to a new record low of $1.0327 on Monday, the pound is expected to end the week up 2.26%.

The sterling rose by 2.13% overnight as the Bank of England (BoE) continued bond purchasing for a second day to stabilize markets and drive up gilt yields.

In an effort to revive the country’s sluggish economic growth, Prime Minister Liz Truss unveiled last week a sweeping program of tax cuts and investment incentives.

Finance Minister Kwasi Kwarteng stated in the House of Commons that the government wanted a “new approach for a new era focused on growth” and was targeting a medium-term 2.5% trend rate in economic growth.