Currency Note

Chancellor to reveal spending plans today

By Christopher Nye November 25th, 2020

Editorial credit: T Salci /

The pound is still strong against the euro and the dollar this morning as vaccine positivity and hopes of a Brexit deal keep it buoyant. Later today, Chancellor Rishi Sunak will announce the government’s spending plans for the coming year and will also assess the economic damage inflicted by the coronavirus pandemic.

The dollar is weak after President Trump made way for the Biden administration this week, fuelling hopes of a stimulus package for the US economy and progress towards a vaccine.

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GBP: Pound strong on positive market sentiment

The pound is still at strong levels this morning due to positive vaccine news earlier this week and optimism surrounding a Brexit deal. Negotiations are expected to continue in London from tomorrow and the markets await further updates this week.

There are also expectations that Prime Minister Boris Johnson and President of the European Commission, Ursula von der Leyen, will talk over the phone this week in an attempt to secure a high-level breakthrough.

Chancellor of the Exchequer, Rishi Sunak, will set out his spending plans today for the coming year. He will also explain the economic damage caused by the coronavirus pandemic.

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EUR: Euro nears a 3-month high against dollar

The euro is nearing a three-month high against the dollar this morning and is gaining some ground against the pound.

The IFO Business Climate indicator for Germany was released yesterday, which measures sentiment about the current business situation and expectations for the next 6 months. The figure dropped to 90.7 in November from 92.5 in the previous month, still above market expectations of 90.1.

This should that companies became more pessimistic following tougher restriction measures to curb the spread of the COVID-19 pandemic.

Today, ECB officials and ECB President, Christine Lagarde, will make speeches.

USD: Former Fed Chair rumoured for cabinet

The dollar has continued to weaken this morning, as it has currently lost its safe-haven appeal. Overall sentiment is positive due to vaccine news and hopes of a stimulus package to help the US economy.

After President Trump made way for the Biden administration this week, there have been reports that former Federal Reserve head Janet Yellen is set to become Treasury Secretary. She is an advocate of big fiscal stimulus, which has ignited hopes that a stimulus package will be put forward by the new administration.

Durable goods orders and personal spending figures will be released for the US today, both expected to show a drop in October. The Federal Reserve will also publish the minutes from their latest monetary policy meeting this evening, which should give an indication as to whether the Fed are considering more stimulus measures.

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