Home Daily Commentaries UK budget comes into focus

UK budget comes into focus

Daily Currency Update

UK data yesterday showed consumer prices rose 11.1% in October from a year earlier. This further signals that the Bank of England may continue hiking interest rates to tackle the growing inflationary concerns. The European financial stability review confirmed that households and firms across the euro area are already feeling the effects of higher inflation and weaker economic activity, amid the ongoing energy crisis prompted by the war in Ukraine. US retail sales painted a prettier picture rising 1.3% month-on-month verses a forecast 1%. Sales rising at a stronger pace than expected follows a recent bout of positive data from the US, which is supporting a less aggressive need for rate hikes from the Fed. Headlines elsewhere show political tensions remain over a missile strike on Poland. An investigate continues into discovering the source of the strike, which was initially believed to have come from Russia. GBP/USD has seen a choppy 24 hours bouncing between 1.1850 and 1.1950. The currency pair opens just under 1.1900. GBP/EUR attempted to break 1.1500 earlier this morning, but is back down at 1.1460 which is where it has traded overnight. EUR/USD is off the highs and trades at 1.0370.

Key Movers

Attention today will be firmly be on the UK Chancellors Autumn Statement, with tax hikes and spending cuts expected as the government attempts to plug a substantial fiscal black hole. Kwasi Kwarteng unsuccessfully delivered the last budget which saw GBP/USD drop to 1.0384 and GBP/EUR 1.0816. The highlight in Europe will be the latest release of the CPI figure for the Eurozone for October, which is expected to be confirmed at an annual rise of 10.7%, up 1.5% on the month. These two data releases, along with the ongoing tensions in Poland RE: the recent missile strike, are offering up a potentially volatile day for each of the GBP, EUR and USD.

Expected Ranges

  • GBP/USD: 1.1760 - 1.2060 ▲
  • GBP/EUR: 1.1290 - 1.1640 ▲
  • GBP/AUD: 1.7480 - 1.8050 ▲
  • EUR/USD: 1.0180 - 0.048 ▲