Much of the markets focus today was on the UK, with the latest Autumn budget delivered by Chancellor of the Exchequer Philip Hammond.
As I expected there was little reaction by investors as the budget was delivered, with Sterling rates remaining relatively flat across the board.
The key points delivered by Hammond, included Stamp Duty on all properties valued under £300,000 for first time buyers, higher road tax for diesel cars and an additional 2.8 bn for the NHS.
However, despite these claims economic growth forecasts for the UK were cut, which has been directly attributed to the on-going fall out from Brexit.
Overall, the budget didn’t throw up any real surprises and as such it is likely that the driving factors behind Sterling’s value over the coming weeks and months likely to remain unchanged.
Fear over the UK’s economic standing following our eventual separation from the EU continue to drive market sentiment. With investor confidence minimal the Pound is struggling to make any significant inroads against the EUR or USD.
GBP/EUR rates remain range bound, with the Pound continuing to find support around and above 1.10 but failing to sustain any momentum towards 1.15. GBP/USD rates have not threatened to move above 1.35 in months and although the Pound has again found some support above 1.30, this threshold may be tested if the US FED raise interest rates next month and there are no positive developments in Brexit negotiations.
Theresa May is under increasing pressure to unite the government but a failing economy and the negative undertone and perception surrounding this, is hardly doing her any favours.
Whilst the markets never move simply in one direction, whilst conditions remain as they are, I do not anticipate any major improvement for Sterling.
I would be looking to protect the current value on any short to medium range transfers and avoid the very real risk of a further downturn.
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