Sterling was rocked last week by bombshell reports that Chancellor Rachel Reeves was set to ditch plans to raise income tax at the autumn Budget (26 November). While it would ultimately stabilise, the pound to euro rate still worsened by about half a cent between Monday and Friday.
Why are lower taxes so bad, you might justifiably be wondering? The issue was this was the latest in a string of reversals from the government. Scarred by recent history, currency markets are determined to ensure that the government’s numbers add up. The recent flip-flopping was taken as evidence of two things: firstly, that there was no big plan, and secondly, when it came to the Budget, politics trumped public finances.
It wasn’t just Storm Claudia bringing choppy weather to these shores. With less than two weeks to go to the Budget, we strongly recommend you lock in today’s rate should things take a turn for the worse. Protect your money and get peace of mind by calling to your account manager today on 020 8003 4915.
Now that the dust has settled, it feels like the pound escaped lightly from last week’s mayhem. Alongside the Budget furore, economic growth figures came in below expectations, partly a reflection of a damaging cyber-attack on auto giant Jaguar Land Rover. Inflation and retail sales data are on the agenda this week for sterling.
The UK and the eurozone will also report significant manufacturing data on Friday – the highlight of a quiet week for those on the continent.
In the United States, President Trump is facing a crisis of his own with the imminent vote on the release of the Jeffrey Epstein files. Trump switched tact after a weekend away on his Florida estate and is now calling for full transparency and the release of all materials.
