Daily Currency Update

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Sterling movement muted ahead of budget

GBP - British Pound

There was no macroeconomic data of note from the UK yesterday, so the pound took direction from news elsewhere. COVID-19 infections numbers fell below 40k for the second day in a row and the booster jab has been administered to 4.5 million over 50s since September. Although concerns remain over how the first and second jabs will be administered to earlier age groups.

Rishi Sunak is due to deliver his budget tomorrow. The recent leaks have come under scrutiny by the speaker of the house of commons, Lindsey Hoyle, who berated the chancellor that the main details of the budget should be kept secret and announced to all MP’s tomorrow at 12:30pm. One of the leaks surrounded the UK living wage. It is believed that it could increase to £9.50 from April next year.

GBP/USD remains range bound, bouncing between 1.3700 and 1.3800. GBP/EUR has similarly moved between 1.1800 and 1.1900 in the past 24 hours.

Key Movers

Ahead of the ECB monetary policy statement and following press conference, Germany released their IFO business climate survey on Monday. It declined from 98.9 in September to 97.7 in October, its fourth decline in a row. It seems the same factors that are dragging on the UK economy are affecting that of the Eurozone’s largest economy as businesses see supply problems and a fall in capacity utilisation in manufacturing.

EUR/USD has dropped below 1.1600 since yesterday afternoon, whereas prior to the release the currency pair sat above 1.1650. There could be more volatility for the EUR in the build up to the ECB release on Thursday.

Expected Ranges

GBP/USD: 1.3740 - 1.3810 ▲

GBP/EUR: 1.1830 - 1.1910 ▲

GBP/AUD: 1.8310 - 1.8420 ▼

EUR/USD: 1.1580 - 1.1650 ▼