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

EUR/GBP exhibits a volatile performance amid the announcement of UK Labour’s first budget announcement.
The UK administration has announced significant spending plans for various sectors.
The Euro performs strongly on upbeat Eurozone Q3 GDP growth and hot German inflation.

Sagar Dua FXStreet

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%.

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

EUR/USD deflates to fresh lows, targets 1.1600

The selling pressure on EUR/USD now gathers extra pace, prompting the pair to hit fresh multi-week lows in the 1.1625-1.1620 band on Friday. The continuation of the downward bias comes in response to further gains in the US Dollar as market participants continue to assess the mixed release of US Nonfarm Payrolls in December.

GBP/USD breaks below 1.3400, challenges the 200-day SMA

GBP/USD remains under heavy fire and retreats for the fourth consecutive day on Friday. Indeed, Cable suffers the strong performance of the Greenback, intensified post-mixed NFP, and trades at shouting distance from its critical 200-day SMA near 1.3380.

Gold flirts with yearly tops around $4,500

Gold keeps its positive bias on Friday, adding to Thursday’s advance and challenging yearly highs in the $4,500 region per troy ounce. The risk-off sentiment favours the yellow metal despite the firmer tone in the Greenback and rising US Treasury yields.