By Jonathan Lloyd
Sterling remained close to recent lows, as Rachel Reeves spoke at Downing Street early on Tuesday morning, seemingly looking to settle markets and avoid a similar meltdown to the Liz Truss / Kwasi Kwarteng disaster budget. The Chancellor declared she will make the ‘necessary choices’ in the upcoming budget, with markets already anticipating a break in Labour’s general election manifesto. When pushed by journalists if she was set to break that pledge, Reeves did not answer directly, but said she was ‘setting the context for the budget’.
With the Bank of England meeting on Thursday to announce their latest interest rate decision, the Pound is under heavy scrutiny, and this will likely continue to be the case in the short term. While markets see around a 31% chance of a cut on Thursday, any dovish turn from the BoE could see the Pound suffer further.
The US Dollar has quietly gained against both the Pound and Euro in the last week, although many analysts see the Dollar weakening as we head towards the end of the year. With Mamdani winning the New York Mayor vote, President Trump will no doubt look to exert some influence closer to home.
Anyone buying GBP may look to take advantage of these levels, while anyone looking to sell GBP might consider speaking with a currency expert to determine the best ways to achieve results in the current environment.
Key events left this week
Weds
USD – ISM Services PMI
Thursday
GBP – Bank of England meeting
EUR – Retail Sales
USD – Various Fed speeches
Friday
USD – Labour data including Non-Farm Payrolls*
*US data currently hard to release due to government shutdown.