This Pound Sterling report discusses tomorrow's UK Budget and the latest news surrounding the Brexit Divorce Bill as well a brief look at data that could affect GBP exchange rates today. The table below shows the change for a number of GBP currency pairings yesterday:

Currency Pair% ChangeDifference on £200,000
GBPEUR0.5%€1240
GBPUSD0.7%$1900
GBPCAD0.65%$2240

UK Budget Tomorrow

The Autumn budget will be delivered tomorrow by Chancellor of the Exchequer Philip Hammond and it may well provide considerable volatility for Sterling exchange rates. With all the ongoing conflicts the government is currently facing, the well broadcasted budget will certainly keep the pressure on Theresa May and her cabinet tomorrow.

The last budget this Chancellor delivered back in March this year spectacularly backfired after he attempted to raise National Insurance for the self-employed and was forced to scrap the plan in its entirety. If “Friendless Phil” does not deliver this time round then his head will almost certainly be on the chopping block which could see yet another cabinet minister forced to go following others in recent weeks. This time round however he should have done his preparation although if the budget is received badly the Pound could suffer as Theresa May battles on with her small working majority. Expect a big push on housing to appeal to younger voters but other than this the Chancellors hands will be fairly tied so this may be a budget with more gimmicks offered.

Will sterling come under pressure towards the end of the week?

Deal or No Deal?

The two week ultimatum that was given to Britain will soon come to an after Michel Barnier reiterated that Britain must make sufficient progress in the Brexit talks to start discussions on a future trade deal.

To recap the offer on the table from Britain at the moment is €20 billion so it will be interesting to see whether this number changes in the coming weeks and the impact this may have on the Pound.

Although not confirmed there is an expectation that Theresa May will offer €38 billion in mid-December, around the time of a key EU Summit to try and break the deadlock and reach an agreement, allowing negotiations to progress to trade talks.

It was generally agreed in a cabinet meeting last night that more money could be paid if the EU moves forward on trade although the position remains that “Nothing is agreed until everything is agreed.”

Depending on how such a figure is received by the EU will almost certainly dictate the direction for Sterling exchange rates. Clients with pending requirements would be wise to look at their options and consider taking the risk out of the volatile currency markets in these uncertain times. The Pound made good gains across all of the major currencies yesterday providing another window of opportunity for those buyers. These positive rallies are often proving short lived in the current climate.

Data today includes public sector net borrowing figures which could be important ahead of tomorrow’s budget whilst the inflation report hearings could also create some volatility for the Pound this morning.

For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me jll@currencies.co.uk.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.