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Chancellor, Rachel Reeves delivered her first budget yesterday in Labour's autumn statement
Yesterday, UK chancellor of the Exchequer, Rachel Reeves unveiled £40 billion worth of tax rises to revive public spending.
As a result, the pound lost over half a per cent against its major rivals, but later regained its strength against the US dollar. This morning, sterling is just under half a per cent lower against the euro on the week, but is slightly up on the greenback.
Headline releases from Labour’s first budget presentation included tax hikes on inheritance wealth and private jet flights, and raising duties on various components, such as tobacco and alcohol.
These collections are to be pumped back into the NHS, affordable housing, kickstarting the electric vehicle industry and finding duty freeze on fuel.
In other news, the German inflation rate accelerated to 2% in October, the highest in three months, compared to a three-and-a-half-year low of 1.6% in September and estimates of 1.8%.
The US economic growth failed to meet market expectations in quarter three of 2024, expanding at an annualized rate of 2.8%, below quarter two’s 3% and expectations of 3%.
In the eurozone, GDP grew by 0.4% in the third quarter, twice as fast as the 0.2% growth expected. This followed news that Germany avoided a recession and that the Olympics fuelled growth in France this summer.
During the Asian trading hours this morning, the Bank of Japan announced it decided to keep its short-term interest rate target unchanged at 0.25% following its two-day monetary policy review.
Today, the spotlight is on inflation readings for the euro area, which is expected to increase to 1.9% in October. Read more on that below.
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GBP: Soft US GDP figures help the pound
The pound was able to recover early afternoon losses against the US dollar yesterday following news that the US economy expanded at a softer rate than expected in the third quarter of this year.
GBP/USD: the past year
EUR: Headline inflation battle to remain bumpy
European Central Bank policymaker, Isabel Schnabel argued that the board does not need to lower interest rates to a level that would stimulate the economy. She said there is no need to go below neutral, meaning the bank’s 2% target. She instead recommended, “A gradual approach to removing restrictions.”
GBP/EUR: the past year
USD: Private labour industry jobs soar
Private companies in the US adding record jobs in over a year to their payrolls in October, which added 233,000 workers to their books. This is the most hires since July 2023 and much higher than forecasts of 115,000.
EUR/USD: the past year
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