The pound slips against the dollar after briefly erasing its selloff losses, as UK emergency talks fail to deliver

Liz Truss on the campaign trail
British Prime Minister Liz Truss.Dan Kitwood/Getty Images
  • The pound fell Friday after UK government leaders resisted pressure to publish economic forecasts early.

  • The forecasts are still due in November despite a meeting between ministers and the fiscal watchdog.

  • Sterling, which slid on the prospect of tax cuts, briefly erased its losses against the dollar in Asian trade.

The British pound fell against the US dollar Friday, after UK government leaders held an emergency meeting with independent budget experts over a tax-cutting plan that rocked markets this week.

The drop in the UK currency came after the UK's finance minister, Kwasi Kwarteng, and Prime Minister Liz Truss met officials from the Office for Budget Responsibility on Friday, in talks that lasted less than an hour.

After the meeting, the UK Treasury confirmed investors will still have to wait until November 23 for the OBR's economic forecasts around its tax-cutting plan. The government has been under pressure to publish the assessment of the  impact of its plans from the fiscal watchdog, after choosing not to do so alongside its proposals.

The pound was last down 0.40% at $1.1082, reversing earlier gains. In Asian trading Friday, the UK currency hit $1.123, erasing the losses it logged in falling to an all-time low of $1.035 on Monday.

The sterling selloff this week was sparked by Kwarteng putting forward sweeping proposals for debt-funded tax cuts that undermined investors' confidence in the UK economy.

The outcome of the meeting disappointed traders who were betting that political pressure on the government would force it to ease back on the policy, which has drawn criticism from the International Monetary Fund and ratings agency Moody's. There are concerns that the UK's looser fiscal policy could fuel inflation, prompt faster interest-rate hikes, and undermine Britain's already-shaky economy.

Official figures released Friday showed the UK economy grew by 0.2% between April and June, compared with expectations for a 0.1% contraction — a sign that it is not already in recession. That helped ease some investor worries, analysts said.

The turmoil in financial markets prompted a rare intervention by the Bank of England, which said it would temporarily buy as many UK government bonds as needed to stabilize debt markets, and delay the start date for its bond sales.

It also drew a sharp rebuke from the IMF, which warned the UK government's policy could work at cross-purposes to the BoE's efforts to cool red-hot inflation.

Read more: Paul Krugman, Mohamed El-Erian, and Nouriel Roubini are tearing into UK leaders whose spending plans upended markets. Here's what the 3 top economists have said.

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