GBP: Will the budget date be announced this week? – ING
|If the UK government wants the Bank of England to be able to react to a fiscally tight budget, it will have to announce the budget date this week, ING's FX analyst Chris Turner notes.
GBP/USD to test 1.3600 this week
"Remember that the Office for Budget Responsibility requires 10 weeks' notice for the budget, and the November BoE meeting is held on the 6th. The UK government remains in a tight fiscal corner, and one of the risks to sterling over the coming months is a tight fiscal/looser monetary policy package."
"On the subject of monetary policy, we hear from a group of BoE members this Wednesday, testifying to the Treasury Committee. Presumably, they will mostly repeat their hawkish position, which sees the market pricing only 10bp of BoE rate cuts this year. This could leave GBP/USD in a position to test 1.3600 this week."
"Still, a break above there may be hard to sustain since our house view remains for a 25bp rate cut in November. Look out for further tax-raising trial balloons from the UK government – the most recent of which was Friday's suggestion of raising corporation tax for the UK banking sector."
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