UK: Weekly FX Market Update 28 October 2024
GBP
Sterling has been under pressure, fending off the strengthening US Dollar, as the UK awaits next week’s budget.
Wednesday sees the budget finally arrive, though many details have been leaked ahead of time. Chancellor Reeves has said that the £22 billion budget deficit hole will have to be filled by spending cuts and tax rises.
Meanwhile, new government ‘investment’ debt rules may be introduced to help propel the economy forward.
Will the market give her the thumbs up or thumbs down? Will the pound recover its recent losses?
EUR
The ECB has been giving mixed signals recently, with President Lagarde appearing to open the door to a 0.5% rate cut in December by saying that the pace of cuts was ‘not guaranteed’.
However, she also seemed to slam the door shut the following day by talking about ‘caution’ taking precedence over rate cuts.
Meanwhile, Goldman Sachs considers that if Donald Trump is elected President and enacts his tariff plans and tax cuts, it’s possible that EURUSD could fall by 10% to below parity.
Wednesday sees Eurozone GDP data released, and Eurozone CPI on Thursday. Will the results give more clarity to the ECB’s interest rate plans?
USD
A recent Financial Times poll puts Trump in the lead as the stronger candidate to led the economy, showing an advantage over Harris.
Media sources are mostly reporting the US election race to be neck-and-neck. However, Trump leads in some swing state polls, so the market is currently preparing for a second Trump term by buying US Dollars.
US GDP data is set to be released on Wednesday, with the US employment report following on Friday. If they show another set of strong numbers, will the US Dollar strengthen again prior to the US election?
Main events for this week:
Mon Oct 28
17:30 CAD Bank of Canada Governor Macklem Speaks
Tue Oct 29
00:01 GBP BRC Shop Price Index
14:00 USD Consumer Confidence
Wed Oct 30
00:30 AUD CPI
07:00 EUR German Preliminary CPI
10:00 EUR Preliminary GDP
12:30 USD Advance GDP
12:30 GBP Autumn Forecast Statement
Thu Oct 31
00:30 AUD Retail Sales
05:00 JPY Bank of Japan Policy rate/Outlook Report
05:30 JPY Bank of Japan Press Conference
10:00 EUR CPI Flash Estimate
12:30 USD Core Personal Consumption Expenditure Price Index
Fri Nov 1
07:30 CHF CPI
12:30 USD Non-Farm Payrolls/Unemployment Rate/Average Hourly Earnings
14:00 USD ISM Manufacturing PMI