Will the Budget throw up any surprises?

With little in the way of macro data once again, the FX market was moving sideways and trading within now familiar ranges yesterday. GBP/USD (cable) has been holding around the 1.3250 mark for the past 3 trading sessions, a level which represents 50-day moving average for the pairing. GBP/EUR briefly broke the 1.13 level, however was quickly sold off which has seen the pairing trade back to levels broadly unchanged from the start of the week.

Previous Day's Market Highlights

With little in the way of macro data once again, the FX market was moving sideways and trading within now familiar ranges yesterday. GBP/USD (cable) has been holding around the 1.3250 mark for the past 3 trading sessions, a level which represents 50-day moving average for the pairing. GBP/EUR briefly broke the 1.13 level, however was quickly sold off which has seen the pairing trade back to levels broadly unchanged from the start of the week.

Broad US dollar weakness was seen yesterday, likely due to continued slow progress of Trump’s reform agenda. Also slightly softer yesterday was the Aussie dollar, which fell after dovish sounding comments from the RBA.

Germany’s political uncertainty has not dented the euro, with analysts forecasting that the single currency will continue to strengthen into 2018 due to continued strong economic growth prevailing over political uncertainty.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP / EUR 1.1270 1.1451 1.1092 3.14%
GBP / USD 1.3251 1.3321 1.3039 2.12%
EUR / USD 1.1757 1.1858 1.1553 2.57%
GBP/AUD 1.7495 1.7584 1.6852 4.16%
GBP / NZD 1.9366 1.9501 1.8787 3.66%
GBP / CAD 1.6902 1.7171 1.6589 3.39%

Today's Market Highlights

Today, all eyes will be focused on UK Chancellor Philip Hammond’s first Autumn Budget. While likely to focus mainly on domestic issues in the UK, sterling traders will be keeping a keen eye on both the updated economic outlook provided in the Autumn Forecast Statement, as well as any mention of cash settlement relating to the Brexit process. Rumours abound this morning suggest that a financial settlement regarding Brexit is likely to be reached in early December.

Any hints of bumps in the Brexit road would likely see downwards pressure on the pound, possibly seeing Cable test support at the 1.3180 mark and GBP/EUR testing the 1.1200 level. There are significant downside risks to Sterling should any surprises be included in the Budget.

Other data of note released in the North American session, the last full session before the Thanksgiving holiday, includes US Core Durable Goods Orders (m/m forecast 0.4%, previous 0.7%) and US Weekly Unemployment claims (forecast 241k, previous 249k), both at 1:30pm.

The session is rounded off with the release of the minutes from the most recent FOMC meeting, US dollar traders will be looking for hawkish comments to shore up expectations of a December rate hike, which currently stand at around 91%.