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November 2016

GBP strengthened by upbeat Autumn Statement

Published: Thursday 24 November 2016

  • GBP strengthened by upbeat Autumn Statement
  • Federal Reserve expected to hike rates in December
  • Euro remains subdued by Italy referendum

The British Chancellor’s Autumn Statement was largely cautious. Growth targets were downgraded but not by much and the tone of the statement itself was rather upbeat, unlike Mr Hammond. Sterling traders liked it because the Pound made about half a cent of gains against the USD and EUR and similar gains elsewhere. It is unlikely today’s mortgage approvals data will knock the smile off the Pound’s face and that is the only significant UK data today. Hence, Sterling will most likely tread water.
Yesterday ended with the release of the minutes from the US Federal Reserve’s last meeting. These meetings always deliver moderate, measured terms and this was no exception. I hope the actual meetings are more interesting than the minutes but we did get a sense that the December interest rate hike is still a goer.
In spite of the potential for a US rate hike, the GBP-USD rate is still at the upper end of its recent ranges. The GBP-EUR rate on the other hand, is breaking out towards the upper end of its range. Having breached the €1.17 level, there is a chance this pair will press on to €1.20 but there are some words of caution here. This morning’s slew of Gross Domestic Product (GDP) figures from various EU states is unlikely to halt the decline of the Euro, which is damaged by the threat of an Anti-EU and Anti-Euro backlash from Italy. However, if tomorrow’s release of UK GDP data for the third quarter is anything less than on par with the first estimate (2.3% year on year), we may see some profit taking in the Pound and, in the thinly traded markets without US participants, that could be quite a swing.
We will get New Zealand’s trade data overnight and that makes the NZD vulnerable to volatility. Place an automated order to capture the best of that.
And French police have, I think, found the perfect antidote to arrogant people who park anywhere they fancy because they can afford the fines. They spotted an illegally parked Porsche 911 outside a Paris nightclub and, in the wake of recent incidents, treated it as a bomb threat. So by the time the car’s owner returned, it had been blown up in a controlled explosion. I recon you could sell tickets to witness illegally parked Lamborghinis, Bentleys and Bugattis being blown up in London. That would probably raise more than the fines.

At the will reading

A lawyer is reading out the will of a very wealthy man to the various people mentioned in the will.
“To you, my loving wife Mary, who stood by me throughout our marriage, I leave the house and two million.”
“To my daughter, Jodie, who kept the business going, I leave the yacht, all my shares in the business, and one million.”
“And to my brother Dan who thought I didn’t know that he tried to embezzle from me, who argued with me constantly, disagreed with me on just about every matter and was so certain that I would bear such a grudge that I would never mention him in my will, well you are wrong. Hi, Dan!”

Today's Major Economic Releases

Market BST Data/Event Previous Expected
USD All Day US: Bank Holiday    
EUR 09:00 EU: German Information and Forschung (IFO) Business Climate 110.5 110.6
GBP 13:30 British Bankers' Association Mortgage Approvals 38.3k 38.8k
NZD 21:45 New Zealand: Trade Balance -1436m -950m
Daily Currency Analysis by David Johnson

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