Pound exchange rates remain unfazed by Chancellor’s Autumn Budget
Philip McHugh October 30th 2018 - 2 minute read
The pound was left flat in trade yesterday as markets appeared to largely shrug off the UK’s Autumn Budget.
This has left Sterling vulnerable to losses this morning, with GBP/EUR edging down to €1.1238, GBP/USD ticking down to $1.2778 and GBP/CAD sliding to C$1.6744, while GBP/AUD and GBP/NZD are both slumping, striking AU$1.8012 and NZ$1.9507 respectively.
Looking ahead, the release of the Eurozone’s latest GDP figures looks set to be the main event today, with the euro’s fortunes likely to be dependent on whether there continued to be robust growth in the third quarter.
What’s been happening?
The pound was trapped in a narrow range against most of its currency peers for much of Monday’s session as markets awaited the release of Chancellor Philip Hammond’s Autumn Budget.
Despite proclaiming the ‘end of austerity’ and revising UK growth up, Hammond’s financial statement failed to ignite demand for Sterling yesterday, ultimately leaving the currency rangebound at the start of the week.
The announcement that Angela Merkel would step down as German Chancellor in 2021 following major setbacks in regional elections proved to be the other major concern for traders yesterday, with the GBP/EUR exchange rate stuck trading in a narrow range as the resulting political uncertainty in Germany rattled some euro investors.
Meanwhile the GBP/USD exchange rate was also left at a standstill on Monday, with rising market risk appetite and a slowdown in US personal income in September limiting potential upsides to the US dollar at the start of the week.
What’s coming up?
A glut of Eurozone data including the bloc’s latest GDP figures looks set to put the euro front and centre stage today.
While the focus will undoubtedly be on the GDP figures and whether the Eurozone economy will have slowed in the third quarter following a run of soft data, an expected uptick in German inflation could have some bearing on EUR exchange rates during today’s session.
Meanwhile the only UK release of note today will be the latest CBI distributive trades index, but with Brexit still at the forefront of most investors’ minds, markets are likely to ultimately shrug off the retail survey.
Finally an empty US data calendar could limit movement in the US dollar today, although the US currency may still find itself in demand should risk-demand subside once more.