GBP negative arguments remain valid – Commerzbank

Chancellor Jeremy Hunt is under particular scrutiny when he delivers his statement to the House of Commons today. Although the Autumn Statement could regain market confidence, GBP negative arguments remain valid, economists at Commerzbank report.

Hunt’s scope to face down the looming recession with fiscal measures is very limited

“Hunt will mainly have to try today to justify the advance confidence the gilt and Sterling traders have shown in him. And that in turn means: Hunt’s scope to face down the looming recession with fiscal measures is very limited.”

“A recession that cannot be cushioned with fiscal measures will be deeper. And that in turn is likely to make it even more difficult for the Bank of England to fight inflation at the same time.”

“As understandable as it is that the FX market is trading Sterling at higher levels since Kwarteng’s plans have been consigned to the dustbin of disastrous economic plans and as much as jubilation could be caused today by Hunt avoiding these same mistakes one should nonetheless consider that the GBP negative arguments remain valid.”