British Pound Eases Towards Support Ahead of Autumn Statement, BoE
- UK fiscal update via the Autumn Statement this morning, 45-minutes before BoE.
- ECB rate decision, press conference today – watch for signs of liquidity injection.
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Intraday Price Perspective
It’s time for the second of two semi-annual fiscal updates from the UK government. Today’s Autumn Statement is likely to bring a touch more optimism along with it, given the upswing in the British economy over the past eight months. Notably, the UK services sector is putting up its best performance in 16 years.
While Chancellor of the Exchequer George Osborne will likely suggest that a better economy will mean the government won’t need to borrow as many funds this year as previously forecast – perhaps as much as £70B – it doesn’t mean that the current austerity drive is finished. Current government projections see the pace of diminished government spending and higher taxes continuing to at least 2018.
Nevertheless, growing evidence that the UK economy is improving bodes well for the Sterling into the 1Q’14. If the current pace of jobs growth continues into 2014 (+137K 3M/M), the UK Unemployment Rate could hit 7.0% by the 4Q’14, exceeding the Bank of England’s goal of the 3Q’15. The British Pound, having already seen a great deal of optimism boost its exchange rate relative to its G10 peers for much of the past five months, may not see further upside on the Autumn Statement as no new information will be revealed about the state of the UK economy.
Weakness seen in the Sterling amid the Autumn Statement might represent a buying opportunity to build longer-term exposure. The GBPUSD may be building support near $1.6260, former resistance during a consolidation phase in price that lasted from mid-September through the end of November this year.
Here’s the other data influencing and that will influence European FX price action today:
EURO-ZONE ECONOMIC CALENDAR
UK ECONOMIC CALENDAR
SWISS ECONOMIC CALENDAR
There are no events on the Swiss Franc economic calendar for Thursday, December 05, 2013.
--- Written by Christopher Vecchio, Currency Analyst
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