020 7898 0500
UK chancellor Rachel Reeves will deliver the autumn budget today in a huge moment for the pound. Editorial credit: Fred Duval, via Shutterstock
The pound is anxiously awaiting the first autumn budget from the Labour party in 15 years. Chancellor Rachel Reeves will announce new measures in the House of Commons this afternoon that are thought to include tax rises for employers and allow for greater government borrowing.
These relatively drastic measures (at least in terms of the UK’s recent history) could provide a shock for the pound and markets are bracing for volatility. Sterling managed to stay stable yesterday, recording slight advances over its main rivals. The reaction to the budget will dictate whether that strength remains or dissipates this week.
German consumer confidence climbed to its highest level since April 2022, according to October’s GfK consumer confidence study. Income expectations rose alongside consumer willingness to make purchases in the latest ray of sunshine for the much maligned German economy.
US job openings came in below expectations in September, which allowed European currencies to rally against the US dollar. The number of vacancies fell by 418,000 to 7.43mn in September, the lowest level since way back in January 2021.
Despite the lower job figures, US investors are now their most optimistic about the outlook for the stock market since the 1987 “Black Monday” crash (an ironic comparison that won’t be lost on many). The Conference Board’s confidence index shot up to 108.7 this month, far beyond the 99.5 economists had expected.
The French economy grew at an annualised rate of 1.3% in the third quarter of 2024. Boosted by hosting the Olympics, economic growth well exceeded the expected 0.7%.
Donald Trump’s team sought to contain the fallout from the racism row that followed a comedian’s joke at a campaign rally on Sunday. His campaign sought to limit anger in the Puerto Rican community in Pennsylvania, one of the most important states in next week’s US election and one in which polling remains in a statistical dead heat.
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your account manager on 020 3918 7255 to get started.
GBP: Labour’s big moment
Today has been circled in many diaries for weeks. Sterling will be highly sensitive to perceptions of the autumn statement, which could include major pivots in areas like debt and taxation. The first budget in a decade and a half is a chance for Labour to press reset but their path is fraught with risk.
GBP/USD: the past year
EUR: Germany fights back
With the eurozone’s growth numbers propped up by unlikely figures like Spain and Greece, a return to form by the bloc’s biggest economy would be a huge boon. Germany has started to show signs of recovery and further improvement in consumer confidence would suggest more growth down the line.
GBP/EUR: the past year
USD: Win, win?
The US dollar has defied the traditional election volatility to stay remarkably stable this past month. Some analysts have suggested this is because a win by either candidate would be received well, with only a lengthy and tumultuous legal battle likely to affect the US dollar.
EUR/USD: the past year
For more on currencies and currency risk management strategies, please get in touch with your Smart Currency Business account manager on 020 7898 0500 or your Private Client Account Manager on 020 7898 0541.
