Pound rallies against dollar as Sunak vows to clean up Trussonomics mess
By Sharyh Murray-Francis October 26th, 2022
In his first speech as Britain’s new prime minister, Rishi Sunak warned that more “difficult decisions” are on the horizon for the UK. Sunak acknowledged that he was elected during a time of “profound economic crisis” but vowed to clean up the economic mess left by Trussonomics and the mini-budget debacle.
Markets seemed to welcome Sunak’s leadership as sterling leapt against the dollar yesterday afternoon during the lead up to his appointment as PM. The pound maintained most of its gains for the remainder of the business day and continues on the same path this morning.
The rest of the week will be relatively quiet for UK data releases. Today markets will see the UK’s 7-year bond yield data, while on Thursday CBI distributive trades for October will be released.
Eurozone markets have just seen France’s latest consumer confidence reading. It was forecast at 77 and exceeded market expectations coming in at 88. This follows last month’s decline in consumer confidence from 82 in August, to 79 in September.
In the US, new home sales data will be released at 3pm at the same time as the Bank of Canada’s interest rate decision.
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GBP: sterling maintains gains against US dollar
After making and maintaining gains against the dollar yesterday afternoon, sterling is still stronger against the single currency compared to this time last Wednesday. Despite its choppiness since Monday, the pound is also marginally up on the euro compared to this time 7 days ago.
Tomorrow, the UK’s annual car production data will be released as well as CBI distributive trades for October. In the last CBI distributive trades survey, retail sales balance in the UK tumbled to -20 from 37 in August.
GBP/USD over the past year
EUR: euro choppy against the pound while marginally up on dollar
It has been a choppy week for EUR/GBP so far. This morning the euro is slightly weaker than the pound overall, but like sterling it has maintained most of its gains made against the dollar from yesterday.
Following good consumer confidence data from France this morning, tomorrow markets will see the reading for Europe’s largest economy, Germany, at 7am. The picture is less optimistic as low consumer confidence is expected again. Markets are predicting a reading of -40, reflecting concerns over surging inflation, high energy prices and continuing recession fears.
USD: dollar weaker against sterling and euro
Markets can expect a variety of data releases throughout the course of today, from the MBA mortgage market index at 12pm to EIA crude oil stocks change at 3:30pm.
The key data to watch will be new home sales at 3pm. US home sales are expected to make a gentle fall this month after outperforming market expectations of 500k in August – August’s sales data revealed figures rose to an unexpected 685k.
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