While the UK was in the continuing waiting game before today’s Budget, a bigger potential story was developing elsewhere, with claims of a breakthrough in peace talks between the US, Russia and Ukraine. The euro gained some 0.5% against the US dollar.
It’s been a fallow period for data so the markets have been tending to chase shadows and the Russia-Ukraine talks are still at an early stage. However, Ukraine has apparently accepted the ‘core terms’ of a deal and President Zelensky is flying to Washington DC ahead of Thanksgiving tomorrow.
One bit of data we did see yesterday was the CBI’s latest quarterly Distributive Trades Survey. This indicated British retailers are at their most pessimistic for 17 years, and you can take a guess at what they blamed – Budget speculation. However, the chancellor could legitimately claim that it’s not just the UK seeing shoppers keeping their money in their pockets, with a disappointing retail sales result in the USA ahead of the busiest shopping day of the year, Black Friday.
But this side of Europe and the Atlantic there is really only one story and it is the Budget, which the chancellor Rachel Reeves will deliver at 12.30 today. Budgets usually take an hour or two and we will be sending out a Rate Alert as soon as we see the main points and any immediate impact on the currency markets.
However, to watch out for will be whether it raises enough tax to satisfy the bond markets that the UK is on course to pay its debts, and that it does enough to convince rebellious Labour MPs that the chancellor and PM are an election-winning team.
So far we have had a lot of hints and rumours and yesterday a few minor tax announcements, such as extra taxes on sugary food, and a ‘tourist tax’ – a levy that mayors can impose on overnight stays. Nothing too much to scare the horses there, but 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 7898 0541 to get started.
