Sterling fell to its corresponding G10 pairs after Rachel Reeves held an unscheduled announcement confirming that she will raise income taxes, this was one of the main manifesto pledges that the labour government said they would not do if being elected last year. Reeves stated that the new world challenges in the last year has forced the government to change their stance and that its vital for the UK economy moving forward. GBP/EUR has fallen this morning to its lowest levels since back in May 2023, so far almost down 0.5%.
GBP/USD has fallen slightly more than 0.5% in today’s session and this afternoon US will release JOLTs job openings. Expectations is that there will be a marginal smaller amount of job openings this month compared to its previous. Keep in mind that since the shutdown of the US government their main metric of jobs data, non-farm payroll, has not been released. This could implement additional weight to todays release and with the pair already being volatile, a stronger than expected US labour market could push GBP down further.
Sterling under pressure and in two days, Thursday, we will see BoE (Bank of England) hold their interest rate decision. This will be awaited with anticipation from markets, even if expectations is to hold their base rate at 4%, it will be of high importance to its comments after. Will their forward guidance be aligned with expectations from the autumn budget or do we see the two entities looking at the future of the UK economy in different views? Well, this could lead to uncertainty and less confidence overall for the UK economy, potentially driving GBP lower.
GBP/EUR 1.1345 GBP/USD 1.3057 GBP/AED 4.7979
GBP/AUD 2.0107 GBP/CHF 1.0555 GBP/CAD 1.8381
GBP/NZD 2.3070 EUR/USD 1.1496 GBP/ZAR 22.8181