The pound-to-dollar exchange rate has maintained the largest daily gain it has seen in a month’s time.
To finally reach the long-awaited goal of balancing the budget in the United Kingdom (UK), Finance Minister Hunt is thinking about a mix of tax increases and spending cuts that would add up to sixty billion British pounds.
Buyers were able to enter the market thanks to conflicting data from the United States and Fedspeak before worries about the economy slowed the market’s rise.
What are the intraday losses on the GBP/USD pair?
In the early hours of Monday morning, local time in Europe, there have been offers on the GBP/USD pair coming in around 1.1340. Because of this, the pair’s intraday losses have been kept to a minimum. The cable pair, on the other hand, continues to hover near the bottom as it attempts to roll back the biggest daily gain in a month from the day before, despite the fact that markets are reluctant to take risks because of the fear of losing money.
When there were still lingering hopes that China might abandon its “zero-covid” policy, China quickly dashed those hopes early in the week. At the same time, there was an increase in the number of confirmed cases of the virus in the Dragon Nation.
They were more likely to buy as a result of a number of factors, including buyers’ hopes for more private investment in the world’s second-largest economy and buyers’ mixed worries about what the next move will be by the United States Federal Reserve (Fed).
Traders in the GBP/USD currency pair could be influenced by what people in the UK say about how prepared UK Finance Minister Jeremy Hunt is for the release of the fiscal budget on November 17.
According to The Guardian, preliminary drafts of the statement that will be delivered on November 17 show that there are plans to reduce spending by as much as 35 billion pounds and raise taxes by as much as 25 billion pounds. There are likely to be plans to keep the income tax thresholds at their current levels and to aim for dividend tax relief.
The hawkish comments that BoE Chief Economist Huw Pill made, which were published on Friday, also help the bulls in the GBPUSD market. Pill says that inflationary pressures are still pretty strong, but the BOE thinks that more needs to be done.
S&P 500 Futures Drop on Uncertainty Surrounding US CPI
It is important to note, however, that the upward momentum of the quote is threatened by the uncertainty surrounding the US Consumer Price Index (CPI) for October, particularly in light of Friday’s mixed jobs data.
Specifically, the US Consumer Price Index (CPI) for October is due on November 3. Keep an eye on the preliminary estimates for Gross Domestic Product product of the United Kingdom for the third quarter as well (Q3).
In this scenario, S&P 500 futures drop to 3,750, wiping out the day’s recovery from the lowest level in two weeks, while US Treasury yields remain stagnant around the multi-day highs seen the day before. In addition, the recovery of the S&P 500 futures from the lowest level in two weeks was wiped out.
GDP for the third quarter in the UK and CPI for October in the US will be very important indicators to watch after recent hawkish comments from the BOE and discussions about the Fed’s pivot.
Even though a drop in US inflation could help the GBP/USD exchange rate stay the same, buyers may be in a tough spot because the British economy is likely to slow down.