Sterling gained almost 0.5% against the euro while trading flat versus the US dollar in yesterday’s session.
UK chancellor Jeremy Hunt will unveil his eagerly anticipated Autumn statement this afternoon. It’s certainly a different atmosphere from this time last year, when Hunt was forced to make a speech to calm markets in response to the disastrous “mini” budget. That’s not to say the UK is in a particularly strong financial position, but there is at least a platform of stability from which it can build. There’s sure to be some currency moves, so why take the risk – call your trader today!
After a combination of interest rates and inflation helped swell treasury coffers, there is widespread speculation that Hunt could cut some taxes in a dash for growth. All will be revealed this afternoon, but Hunt’s fiscal wiggle room is limited, particularly after he made his pledge not to contribute to inflation.
Yesterday, Bank of England (BofE) governor Andrew Bailey said that markets were underestimating the persistence of UK inflation. In a stark warning, Bailey said “too much weight” was being placed on recent declines in the headline figure.
Chrstine Lagarde has made similar statements recently, with the European Central Bank’s president suggesting she did not expect rate cuts within the next couple of quarters. In a speech on Tuesday, Lagarde said “this is not the time to declare victory” over inflation.
US existing home sales undershot expectations in October, coming in at 3.79mn compared to 3.95mn in September. Despite signs that inflation is slowing, FOMC minutes released last night show the Fed’s policy committee still leans to the hawkish side. “The fact is, the Committee is not thinking about rate cuts right now at all,” chair Jerome Powell said.
Canadian inflation meanwhile surprised to the upside. Market forecasts put October’s read at 3.3%, so the 3.1% result represents solid progress on the north side of the great lakes.
Israel and Hamas have agreed a four-day ceasefire along with the staggered release of prisoners and hostages from both sides. Israeli prime minister Benjamin Netanyahu had yesterday indicated both camps were close to agreeing a multi-day truce during talks mediated by Qatari officials.
The OpenAI board have reached a tentative agreement for ousted executive Sam Altman to return as CEO. The climbdown follows the circulation of a letter signed by a majority of OpenAI staff threatening a devastating defection to Microsoft should Altman not be reinstated.
BofE deputy governor Dave Ramsden said the UK’s break from the EU had served to reduce foreign investment in the British economy. Ramsden said the 2016 referendum had contributed to a lower “speed limit” for the UK economy.
Swedish developer Northvolt has launched a “breakthrough” sodium-ion battery, the company announced. According to Northvolt, the new technology could reduce Europe’s dependence on China for the raw materials used for electricity storage, a key component of the EU’s dash to net zero.
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