Sterling steady after UK Budget and ahead of Gross Domestic Product [Video]

Today's Highlights

• Sterling steady after UK Budget and ahead of Gross Domestic Product

• USD weaker on tax reform and Federal Reserve nervousness

• New Zealand Dollar weaker after Retail Sales

Current Market Overview

It seems the financial markets and the BBC were watching different Budget speeches. Where the BBC reports were full of doom and disaster, the markets saw the measures the Chancellor took as pretty much in line with expectations and the Pound stood its ground ahead of today’s economic growth data.
 
Gross Domestic Product (GDP) was estimated to have grown by 1.5% on the year in the first calculation. Today’s release includes all the data, though, and revisions are not uncommon. It’s obvious, but I’ll say it anyway; anything better than 1.5% will boost the Pound and anything less will have the opposite effect. There are some other data releases today, but they will be overshadowed by the GDP figures.
 
Pound strengthens against US Dollar
 
Whilst Sterling was largely unmoved against the Euro, it did gain ground against the US Dollar.  Fears over the tax policy problems the US is facing were slightly shaded by the minutes from the last Federal Reserve meeting, which showed less keenness to raise interest rates in the face of mixed economic data. This, plus higher commodity prices, conspired to keep the GBPUSD high and many analysts are already pointing towards $1.34 as the next target.  The fact that it is Thanksgiving Day in the US means there will be no US data today and very few US traders at their desks tomorrow. So there is room for further USD weakness.
 
New Zealand economic data disappoints
 
In overnight news, New Zealand’s retail sales took a sharp drop in Q3. The market forecasts were already for a gloomy 0.4% after 1.8% growth in Q2, but the actual number was only 0.2%. The GBPNZD rate spiked during the Asian trading session, but appears to have settled in early European trading. We get the New Zealand trade data tonight and there have been some nasty deficits reported of late, so there is scope for further NZD weakness.
 
Forecasts look good for Canada
 
Canada releases its retail sales data for September later today. The forecasts are very encouraging, so Canadian Dollar buyers may wish to cut risk by trading before 13.30 GMT.

Happy Thanksgiving Day to our American Readers. I know you will be too excited about eating a massive turkey to read this, but have a great day anyway.