EUR/GBP trades volatile near day’s high amid UK budget announcement

The EUR/GBP wobbles near an intraday high around 0.8350 in Wednesday’s New York session. The cross trades volatile amid the announcement of the United Kingdom (UK) Autumn Forecast Statement by Chancellor of the Exchequer Rachel Reeves.

In the first budget announcement under Labour’s administration, Reeves has announced tax hikes on inheritance wealth and private jet flights, and raise duties on various components such as air passengers, alcohol and tobacco.

The government has announced big-bang spending plans such as: 40% relief on business rates for retail and hospitality industries up to a cap retail, higher investment for affordable homes, set up of Electric Vehicles (EV) industry and 11 green hydrogen projects.

Meanwhile, the Office for Business Responsibility (OBR) has upwardly revised the Consumer Price Index (CPI) forecast to 2.5% in 2024, from 2.2% announced in March.

The cross performs strongly in North American trading hours due to upbeat Euro (EUR). The shared currency pair strengthened after the release of the Eurozone flash Gross Domestic Product (GDP) data, which showed that the economic growth was faster-than-expected in the third quarter of the year. The Eurozone economic output rose by 0.9% year-on-year, faster than estimates of 0.8% and 0.6% growth in the previous quarter.

Meanwhile, hotter-than-forecasted German inflation has also strengthened the Euro, a scenario that is unfavorable for European Central Bank (ECB) dovish bets. Annual German Harmonized Index of Consumer Prices (HICP) grew at a faster pace of 2.4% than estimates of 2.1% and the September reading of 1.8%.