GBP: Positive data can’t stop sterling giving up yesterday’s gains

On Monday we saw sterling make gains across the board, without much in the way of news or data to support it. However, a proportion of these gains were given up yesterday, despite positive borrowing and industrial data. British manufacturers reported their healthiest order books since before the Brexit vote. Stoking the flames on the much debated inflation issue, however, the CBI also stated manufacturers intend to raise prices at the fastest pace in almost three years; reflecting the sharp fall in the value of sterling. Meanwhile, Chancellor Hammond got a boost ahead of today’s Autumn Statement. Public sector borrowing was lower than expected last month. Borrowing – excluding the effect of bank bail-outs – came to £4.8bn; down from £6.4bn in the same month a year ago, according to the Office for National Statistics.

As stated today, much of the focus will be on Chancellor Hammond’s first Autumn Statement. It will be his first opportunity to outline his priorities for taxes and spending since taking office, in light of the Brexit vote. The Autumn Statement is expected to free up some money to help families on modest incomes, which is PM Theresa May’s big focus (otherwise known as the JAMs – families who are ‘just about managing’). The market will be more interested in any measures linked to corporation tax, borrowing and debt, as well as the Office for Budget Responsibility’s growth forecast. The Autumn Statement is due at 12:30 pm.