Sterling strengthened on Monday after Britain scrapped plans to cut the top income tax rate, while the yen weakened past 145 per dollar, near the level at which Japanese authorities intervened last month.
The pound hit $1.128 after media reports of a u-turn in tax rate cuts. The level was the highest since September 22, a day before the actions of British finance minister Kwasi Kwarteng which prompted a market collapse where plans to cut taxes and regulations, financed by a large government loan.
The pound currency is currently trading up 0.89% to trade at 1.1259. The US dollar index, which measures the US dollar currency against six major currencies, was traded down 0.14% to a trading level of 111.933.
According to Jane Foley, FX analyst at Rabobank, sterling performed better after the U-turn decision, but there are questions about how it will be implemented.
The euro fell 0.2% to $0.97785, unsupported by manufacturing activity data that reported a decline last month.
Other reports, oil producer group OPEC+ is discussing a potential output cut of more than 1 million barrels per day also hurt the currency, given the uncertain European energy situation.
In contrast, Dow Jones stocks moved higher on Monday as Wall Street tried to start the new month, and quarter, on a strong note. The Dow Jones stock index jumped 235 points higher, or 0.8%. The S&P 500 rose 0.5% after falling Friday to its lowest level since November 2020. The Nasdaq Composite was unchanged.
Economic activity in the manufacturing sector expanded in September, with the overall economy achieving its 28th consecutive month of growth.
The September Manufacturing PMI registered 50.9 percent, 1.9 percentage points lower than the 52.8 percent recorded in August. This figure shows developments in the overall economy for the 28th consecutive month after the contraction in April and May 2020.
