- Pound (GBP) holds steady after gains yesterday
- Chancellor’s Budget is expected to be tame
- Euro (EUR) looks to the ECB stability report
- Eurozone consumer confidence is due
The Pound Euro (GBP/EUR) exchange rate is holding steady after yesterday’s gains. The pair rose +0.57% in the previous session, settling on Tuesday at €1.1488 and trading in a range between €1.1422 – €1.1494. At 09:00 UTC, GBP/EUR trades +0.01% at €1.1489.
The pound is holding steady ahead of the Chancellor’s Autumn Statement, which is due to be unveiled at 12:30 GMT.
It is one of the key financial events in the political calendar where the Chancellor will update parliament on the UK’s finances and the government’s spending plans.
The Office for Budget Responsibility will update its growth forecasts for the UK and is expected to revise lower its March predictions of 1.8% growth in 2024 and 2.5% growth in 2025. More recently, the Bank of England has predicted closer to 0% growth for both years.
Inflation forecasts will also be under the spotlight, with the OBR previously expecting inflation of 0.9% next year, which appears a little optimistic given that inflation is still 4.6% year on year and that the Bank of England doesn’t see it returning to 2% until the end of next year.
Some measures have already been pre-released such as full expensing, which is a way of helping to support business investment, as well as National Insurance cuts and an increase to the minimum wage next year.
The pound will be looking for a steady-as-you-go budget after Liz Truss’s disastrous budget last year where unfunded tax cuts spooked the market sending the pound to a record low versus the US dollar.
Meanwhile, the euro is expected to focus on the ECB financial stability report, which could shed more light on credit conditions within the euro area.
The biannual report could highlight the impact of high-interest rates on credit conditions, and a deteriorating outlook may negatively impact the euro.
Also in focus will be eurozone consumer confidence data, which is expected to improve very slightly to -17.6, up from -17.9. Improving consumer mora could mean that households will increase their spending, lifting the economy and adding inflationary pressures.
