- The pound is steady ahead of the first Labour Party budget in 14 years, which Chancellor Rachel Reeves warned involves “difficult decisions.” The Chancellor has a challenging task of ending austerity, boosting growth and delivering fiscal stability whilst reassuring financial markets that her party can be trusted to look after the UK’s finances. Tax rises will be the main headline grabbers, with Reeves expected to raise around GBP 35 billion a year in tax and welfare savings. GBPUSD is hovering around the 1.30 area ahead of the budget with the pair likely to drift sideways before Reeves stands to deliver her budget at 12.30pm UK time. Resistance comes in at 1.3045 and on the downside, the psychological 1.29 area acts as support ahead of 1.2860. EURGBP continues to find decent support at 0.83, a level which has been steadfast all the way back to the Brexit vote.
- Labor market data out of the US remains the key event of the week, with Friday’s Non-farm Payroll print eagerly awaited ahead of the election and FOMC meeting next week. Data released yesterday showed that September job openings were down to 7.4million from a downwardly revised 7.9million in the previous month. Recent data suggests that the jobs market in the US is cooling and today we await the ADP Private payroll release which is expected to come in around 110,000 versus last month’s print of 143,000.
- EURUSD bounced off support at 1.0770 yesterday, catching a bid to propel the pair back to a 1.08 handle. Euro area GDP is released this morning, and markets expect the regions economy to have expanded by 0.2% in the third quarter. German GDP will be closely monitored with the bloc’s largest economy expected to have contracted by 0.1% in Q3, unchanged from the second quarter. The manufacturing and construction sectors are struggling and household consumption showing no clear signs of a revival, potentially pushing the country into a recession.
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