There Could Be Trouble Ahead – Autumn Budget Released Today
5 December, 2012
Sterling had a fairly poor day against most currencies on Tuesday, completely the opposite form compared to the previous day. The only currency the pound managed to make gains against was the broadly weaker US dollar, reaching fresh 1 month highs.
The pound wasn’t helped by the UK construction PMI figure, which posted a contracting 49.3 compared to the expected 50.5 growth figure. This added to the already rife speculation that today’s autumn budget report, including economic growth expectation, is going to be fairly grim reading. The worry is, George Osborne could announce the government have missed growth and debt reduction targets, laying Britain open to the risk of a reduction in our AAA rating, which is without doubt, not going to be very sterling positive.
For those looking to buy Euros, the cost of that European getaway increased by half a cent on Tuesday, helped by an unexpected increase in the EU Producer Price Index figure. It seems even Franco-German quarreling over the European Central Bank’s level of control of EU banks couldn’t halt the Euros rise, as it made further gains against the US dollar also.
Over in Canada, the central bank kept interest rates on hold at 1%, stating that it would need to “increase rates over time”. The statement of intent allowed the Loony to make good gains over the afternoons trade. Mark Carney, the soon-to-be Bank of England governor is a well know hawk, so could this kind of stance on interest rates, despite poor growth, be on the table for the UK come the summer?
Today is a full day of data releases, with various European figures and some initial US employment data (ahead of Friday’s key non-farms payroll). Domestically we have UK house price and services PMI data, although these are likely to remain shadowed behind the coming “autumn budget”. Lets hope the Chancellor might just surprise with a more upbeat report, but just in case, it might be worth speaking with us here at Currency Index to put those Stop Loss Orders in, covering your upcoming currency purchase from getting too expensive should things look not so rosy!
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