A muted day for currency markets saw the pound gain around 0.25% against the US dollar and fall by around the same amount versus the euro. This did, however, take GBP/EUR to another six-month low.
The promise of tax cuts failed to perk up the markets, as the prime minister made clear that that is his ambition ahead of the chancellor’s Autumn Statement tomorrow. This remains the focus in the absence of meaty macro reads. Sterling will be under the microscope in the runup, as history tells us that changes to policy can influence currency markets, as in the infamous mini-Budget last year, which sent GBP/USD to its lowest level for decades. Could that be repeated? Why take the risk – call your trader today!
Ahead of tomorrow’s statement, Jeremy Hunt stressed that he would not sign off on any tax cuts that could nudge inflation higher. There are however signs that recent economic data might give him scope to make a few growth-focused cuts, possibly to inheritance tax, or – in a seemingly more remote eventuality – even to income tax. That possibility has been raised by decreased government borrowing costs highlighted this morning.
Minutes from the Federal Reserve’s FOMC committee are set to be published tonight, and markets will no doubt be following the breadcrumbs for any insight on interest rates. The US schedule is light either side of Thanksgiving on Thursday, although forecasts predict Wednesday’s durable goods figures will show a notable slump from the month prior.
Things are also quiet in the eurozone. The week’s two main events both come from Germany, which will share November’s manufacturing PMI along with the outcome of the Ifo business climate survey.
In business news, ChatGPT-creator OpenAI faced a broad revolt following its ousting of Sam Altman, as almost 75% of workers signed a letter demanding he be reinstated. The founder has since joined a new arm of Microsoft, and employees threatened an immediate defection should the board fail to resign.
The Abu Dhabi-backed investment fund RedBird IMI has said it is to take control of the Telegraph and Spectator newspapers, in a deal that will repay debts owed by the papers’ previous owner, the Barclay family.
Credit rating agency Moody’s maintained its investment-grade rating on Italy’s sovereign debt. A downgrade would have taken Italy’s rating into “junk” status, indicating a higher risk of default compared to other major economies.
Argentina’s stock market rallied upon news of Javier Milei’s victory in the presidential elections. The Argentine peso treaded water against major currencies, but this ambivalence will be tested as the new executive confronts recent economic pressures. Milei promised nothing more than the “reconstruction of Argentina”, so expect some currency movements.
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