Well, here we go. Sterling is now nudging higher as there is word on the street that the government may look to perform 'the mother of all U-turns on the mini-budget', despite having earlier brushed aside talk of that here.
There was already a hint to the move earlier from gilts, as was tipped by our friend PiQ in this earlier post. It looks like the government is the one causing the ripples. Here's the source tweet for this post:
A former cabinet minister tells me: “Brace for the mother of all U-Turns on the mini budget today. A friendly person in the know is advising us to steer clear of the media today to avoid the explosion. We wouldn’t want to look silly by tomorrow.” #waitandsee
— Nicholas Watt (@nicholaswatt) October 13, 2022
That's going to be real interesting but keep in mind, for now this is all talk still. There's also added context here:
Downing Street denying any changes to mini budget but I'm told by sources discusssions underway over which bits might yet be junked give the scale of the concern
— Sam Coates Sky (@SamCoatesSky) October 13, 2022
Looking at a return to the mandate from the leadership contest
No clarity on timing of announcement if it happens
So far, gilts aren't responding too much with 30-year yields still holding down about 30 bps to 4.57% at the moment.
Update: GBP/USD now climbing above 1.1200, up 1% on the day.
