25/11 – Sunak to outline spending plans

GBP: Sunak due to speak at 12.30

EUR: Too early for a run at 1.20

USD: Worst day for 3 weeks

Sterling

Sterling has yet to break through the upside posed in GBPUSD and today looks like another opportunity for an attempt. The USD is on the back foot courtesy of a pick-up in risk sentiment and moves higher in commodity currencies with selling pressure coming from portfolio managers rebalancing their investments ahead of month end; a pressure that is coming earlier than usual given the Thanksgiving break beginning tomorrow.

Front of mind for a lot of GBP watchers will be today’s speech from the Chancellor outlining his spending commitments moving forward; tax rises will not be announced today but we do know that the Chancellor believes taxes will need to increase within this parliament as opposed to waiting until after the next election, due in 2024.

Likewise, debt level forecasts will be updated and while this will likely garner some headlines now is not the time to worry about the bill. We still have a recovery to secure; austerity would endanger a lot of the good work that has been done already.

Euro

EURUSD is capitalising on the weaker dollar, breaking above the 1.19 this morning and while today is too early for a run towards the 1.20 level, especially with the December ECB meeting still to come, the desire for the pair to break above that level is clear to see.

Once again European macroeconomic data is not harming the euro given the recent declines in economic sentiment. While that may not make much sense at first blush, the narrative of a global recovery just over the hill is helping matters decisively.

US dollar

Wherever you look, markets are optimistic this morning. Stocks are higher, the dollar is weaker, both oil and copper are rebounding strongly and news flow from the US and the wider world suggests that this is no fluke. Evidently issues remain over the path of the recovery in the States and whether that leads or lags the global bounce back; for now, markets are betting on the latter with the dollar weaker and US yields steady and flows into emerging market currencies growing day by day.

Today is a busy day of US data ahead of the Thanksgiving break but we expect the USD to remain sold through the session.

Elsewhere

Everywhere else, things are trading pretty narrowly ahead of the long US weekend for the Thanksgiving holiday.

Have a great day.

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Jeremy Thomson-Cook

Jeremy Thomson-Cook

Jeremy has over 13 years experience working in the FX industry. As a specialist in political risk mitigation and currency hedging, he regularly advises clients on the day-to-day moves of the markets and the implications of fiscal and monetary policy on international businesses.