US dollar remains strong

Daily Currency Update

There was no macroeconomic data of note on Monday with Sterling taking direction from headlines elsewhere. The main news was that new Chancellor of the Exchequer, Kwasi Kwarteng, brought forward the date by which he is to release his plans for cutting the UK’s debt after the huge outlays for COVID by his predecessor, Rishi Sunak, and the substantial amount committed to protect consumers from soaring energy costs.

The original date was due to be November 23^rd, but it will now be October 31^st. It seems the move has been made to calm financial markets, showing that the new government is organised and does have a grip on its finances.

It will also enable the Bank of England to makes its next interest rate decision (November 3^rd) in the knowledge of government plans. GBP/USD remains under pressure however, touching 1.1000 earlier this morning after UK data showed unemployment dropped to 3.5%, its lowest level in 50 years, but wage growth at 6% remains way off the CPI of 9.9%. GBP/EUR had also dropped to 1.1350. Both currency pairs are a little higher this morning since the data release.

In the day ahead, Bank of England governor Bailey is due to participate in a moderated discussion at the Institute of International Finance Annual Membership Meeting in Washington DC. Outside of this, Sterling movement will likely take direction from headlines elsewhere. Tomorrow the main data releases for this week begin with UK GDP m/m expected at 7am and in the evening we will see the US FOMC meeting minutes.