- USD rallies ahead of the US Thanksgiving holiday
- UK Chancellor Hammond sets aside £27bn as a Brexit fiscal shock-absorber
- Fed minutes indicate a December rate hike looks increasing likely
via Barclays
Ahead of the Thanksgiving holiday, the US treasury sell-off returned, US equities continued to surge and the USD extended its gains across the board. This was helped by the release of the durable goods report which showed broad strength, with durable goods orders rising 4.8% in October
Following the UK Autumn Statement, GBP rallied on Chancellor Philip Hammond’s announcement of a raft of policy measures, with £27bn set aside as a fiscal shock-absorber to insure the economy against the uncertainty caused by Brexit. Consequently, the Government no longer seeks to achieve a budget surplus by FY 19/20 but instead expect to be in deficit in FY 21/22 (of 0.7pp of GDP)
Barclays Research “…believe that the OBR’s ‘Brexit’-related downward revisions to growth forecasts rely on overly optimistic assumptions regarding headline and underlying growth, increasing risks that fiscal targets will once again be missed…”
In the US, the minutes of the November FOMC meeting provided little new information. FOMC members continued to expect that gradual tightening in monetary policy would be consistent with a moderate expansion in activity and continued improvement in the labor market. In addition, “almost all of them […FOMC members]” continued to think that risks to the outlook are roughly balanced
Barclays Research continue to look for a December Fed rate hike whilst markets are pricing in a 100% probability of a December Fed rate hike
Today’s currency rates:
GBPUSD: 1.2432
GBPEUR: 1.1772
EURUSD: 1.0560
GBPAUD: 1.6847
EURGBP: 0.8495
