Pound still under pressure after government borrowing data
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Daily Currency Update
The pound slid on Friday morning after public sector borrowing data for August highlighted the huge pressure the government's finances are under. Markets were expecting around £12.8bn to have been needed however, the print showed £18bn was required for the month. The near 50% overshoot drew more criticism for Chancellor Rachel Reeves ahead of a November budget that will require tax rises to balance the books. Concerns over the fragile state of the UK’s finances pushed GBP/USD down from around 1.3550 to a low near 1.3450 earlier this morning. GBP/EUR provided an even clearer reflection of the negative sentiment, dipping to roughly 1.1455 on Friday. Both pairs have recovered slightly today, but sterling remains vulnerable to further pressure from rising borrowing costs and climbing bond yields.Key Movers
This week sees the monthly economic health check of the UK, Eurozone and US with tomorrow bringing the latest PMI survey results. The Eurozone's manufacturing sector will be looking for more evidence its recent slump has come to an end. The hiring component of the US reading will be an area of focus given the recent stalling of the labour market. From the UK the dominant services sector will likely be the main driver for the pound. Downside moves could be pretty dramatic should we see a poor reading given the negative sentiment we have seen since parliament returned. Thursday brings unemployment data from the US ahead of Fridays US Personal Consumption Expenditure reading. EUR/USD trades around 1.1750Expected Ranges
- GBP/USD: 1.3400 - 1.3450 ▼
- GBP/EUR: 1.1455 - 1.1540 ▼
- GBP/AUD: 2.0405 - 2.0555 ▼
- EUR/USD: 1.1680 - 1.1820 ▼