Following Wednesday’s open, sterling experienced a loss of around 0.3% against the EUR and USD. However, those losses were short lived as the UK’s Autumn Budget proved to be more generous than expected, despite multiple detailed leaks. UK Chancellor Rishi Sunak revealed plans relating to infrastructure, alcohol duty cuts and an increased budget for all departments totalling around £75 billion. In addition to this, the Office for Budget Responsibility (OBR) sees UK GDP expanding 6.5% in 2021, and forecasts 6% of growth and CPI of 4% in 2022. This fortified expectations that the Bank of England will hike rates at next weeks policy meeting which gave support to the pound. Meanwhile, France suggested they would block British ships from entering their ports next week should the UK persist on easing their controls on fishing. This has kept a cap on any gains.


The dollar fluctuated between gains and losses on Wednesday, opening today at similar levels to yesterday. A slight pickup in the US Treasury bond yields helped limit the USD whilst the Dollar Index continued its cautious note and hovered around the 93.90 region once again. Data from the US showed on Wednesday that Durable Goods Orders contracted by 0.4% in September, compared to market expectation for a decline of 1.1%. The smaller than expected retraction did little to move the dollar. Looking forward, the US Bureau of Economic Analysis will release its first estimate of the annualized GDP growth for Q3. The expectation is that the US economy will have lost momentum last quarter, although a stronger than expected reading could strengthen Fed rate hike expectations.


The European Central Bank will announce its policy decisions today at 12:45pm followed by President Christine Lagarde’s press conference at 13:30pm. Investors are awaiting to see the ECB’s stance on rising global consumer prices and for any indication of future tightening. Despite the expectation that rates will remain untouched in this meeting, traders are hoping Lagarde paves the way for a December announcement, as policymakers cannot keep ignoring mounting inflationary pressures. Headline inflation in the EU hit 3.4% YoY in September, a 13-year high, while the German Consumer Price Index in the same period rose by 4.1%, the highest in almost three decades.

Economic Calendar

12:45pm ECB Interest rate Decision
13:00pm German Harmonised Index of Consumer Prices (YoY)(Oct)
13:30pm US Initial Jobless Claims
13:30pm US GDP Annualised (Q3)
13:30pm ECB Press Conference