GBP/USD weakens near 1.3000 ahead of UK Fall Budget
The GBP/USD pair weakened around 1.3010 despite the US Dollar (USD) consolidating during the early European session on Wednesday. Investors await the release of the UK Fall Budget, the US ADP Employment Change for October and the advanced US Q3 Gross Domestic Product (GDP), due on Wednesday.
The US Bureau of Labor Statistics (BLS) reported in its Job Openings and Labor Turnover Survey (JOLTS) on Tuesday that job openings reached 7.443 million, following the 7.861 million (revised from 8.04 million) seen in August, and below market expectations of 7.99 million. This report may prompt the Federal Reserve (Fed) to play a dovish bet and weigh the Greenback against the Pound Sterling (GBP).
The Fed is likely to cut its benchmark interest rate by 25 basis points (bps) on Nov. 7, according to all 111 economists polled by Reuters, with more than 90% expecting another quarter-percentage-point move at its December meeting.
On the British side, the government will deliver its first Labour Budget in almost 15 years on Wednesday. Rachel Reeves, the Chancellor of the Exchequer, is likely to announce tax rises and spending cuts totaling £40 billion overall. Employer National Insurance contributions, capital gains tax and inheritance tax allowances are all possible targets.
Commerzbank analysts noted that if the budget combines austerity with hopes of addressing long-term investment, “This would be positive for the pound as it would strengthen the UK’s long-term growth potential.”
Source: FXStreet
