Yesterday was a quiet day for the market in terms of economic releases. It’s a different story for today, with the decider of the US election – with it being so close to call, it is likely that we will first see the result on Wednesday. What outcomes could the winner have on markets and economic forecasting?
Following the bond sell off’s last week after the Chancellor’s Autumn budget, the Pound has managed to steady itself going into the new week, as it seems Gilt investors are convinced of the Government’s spending plans- how this plays out over coming months is still unknown but for now it looks like the dust has settled from a bonds perspective- going into this week we have a few major events which should give us a relatively volatile week on the market.
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The fallout from The UK budget earlier this week has seen Pound Sterling drop by roughly 1% against both The Euro and US Dollar as the biggest tax rises in a generation were announced. A big driver for the downward movement in Sterling was also due to a massive sell-off of GBP assets as well as Government Bonds rising to 4.5% for the first time in a year.
Rachel Reeves has now released her first budget as The Chancellor and there will be relief that she has avoided the disaster-class that Liz Truss served up just two years prior. It was mentioned that the budget deficit would fall sharply throughout 2026/27, before creeping higher again shortly after.
All eyes are on the budget, and we've seen Pound Sterling remain elevated against its major currency peers as the markets are choosing to focus on potential positives to be released later today. Although its been made clear there will be several tax rises across the board, in the form of Inheritance Tax, Stamp Duty, Capital Gains Tax, Fuel Duty and much more, Rachel Reeves has also pledged to invest more in the economy which will allow people to have more pounds in their pockets' and a greater National Health Service.
Walking into the Tuesday session, we start off with UK mortgage data in the morning. Expectations looks like mortgage approvals are on a slight down trend in October if we compare to its previous figures of September.
Sterling has managed to keep above 1.20 against the Euro but unfortunately slipped below the 1.30 handle against the Dollar. Following a relatively quiet week we saw pretty sideways price action now leading into a pretty busy week going into November- which is expected to be a volatile month.
