Daily Analysis: UK Budget Looms

Our daily analysis of EUR, GBP and USD.

GBP

• As Chancellor Rachel Reeves budget looms, markets await an expected £40bn in revenue-raising measures which include a potential hike to the national insurance payroll tax for employers, increase to capital gains tax and inheritance tax.
  • It is expected Reeves will put investment in the NHS at the forefront of the need for the tax rise package however the Starmer administration will be under scrutiny as their election pledge stated it had ‘no plans’ to raise taxes beyond what it set it in their manifesto.
• Traders will be on edge to see how markets digest the budget with Liz Truss’s infamous disaster, which ultimately led to her resignation, still fresh in the memory.
• Sterling remains unmoved for the time being but depending on the finer details of the budget, the pound could come under heavy pressure.
• GBP/USD hovers around 1.3000.

USD

• Exactly 7 days until the US election, Donald Trump and Kamala Harris are in full pitch mode to battleground states. A race that appears to be tighter than anyone expected will come down to the wire, however voters are already airing concerns over the credibility of the result of the election.
• US Consumer Confidence for October released at 2pm.
• JOLTS Job Openings for September released simultaneously.
• EUR/USD moves back above 1.0815.

EUR

• No high impact data out of the Eurozone today which is made up for tomorrow as a stream of data filters through the market.
• EUR/GBP remains rangebound trading at 0.8330.

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