- Chancellor of the Exchequer Philip Hammond laid out the Budget in the Commons yesterday in a statement that was overshadowed by revised assessments of the UK economy’s future growth prospects.
- The Budget itself was free of any controversy with the key points being;
- Stamp duty for first-time house buyers has been scrapped for properties worth up to £300,000.
- £44bn will committed to support a housing target of 300,000 new homes a year by the mid 2020s.
- Vehicle excise duty for new diesel cars not meeting the latest standards to rise by one band next April.
- Hammond told MPs that the growth forecast has been cut from 2% to 1.5%. Similarly forecasts for 2018, 2019, 2020 and 2021 have been revised down to 1.4%, 1.3%, 1.5% and 1.6%, respectively (BBC).
- Annual CPI is forecast to fall from 3% to 2% later this year and productivity growth has been revised down by an average on 0.7% per year up to 2023.
- It is expected that 600,00 more people will be employed by 2022.
- The Government will set aside £3bn over the next two years to prepare the UK for ‘every possible outcome’ as Brexit negotiations continue.
- The markets reaction was somewhat muted. Sterling did weaken slightly against most other majors over the course of the day excluding against the US dollar.
- GBP/EUR closed 5 points lower after opening at 1.1276 and closing at 1.1271.
- The US dollar weakened yesterday following investor concerns that low longer-term government bond yields may be signalling a weakening outlook for growth and inflation. (WSJ)
- As a result of this GBP/USD rallied by 0.64% to close 1.3322 after opening at 1.3237.
- Core durable goods orders m/m from the US came in as expected at 0.4%, unemployment claims came in at 239K and durable goods orders m/m came in weaker than expected at -1.2% vs 0.4% expected.
- At 7pm the FOMC minutes were released which showed general support for a 3rd rate hike this year.
- Retail sales q/q from New Zealand came in at 0.2% vs 0.4% expected and core retail sales q/q came in weaker than expected at 0.5% vs 0.9%.
- GBP/JPY, GBP/AUD and GBP/NZD are currently trading 147.88, 1.7449 and 1.9303, respectively.
- Today is Thanksgiving holiday in the US.
- Flash manufacturing PMI and flash services PMI from Europe came in at 60.0 vs 58.3 and 56.2 vs 55.3, respectively.
- Second estimate GDP q/q from the UK has come in at 0.4% as expected.
- This afternoon we expect core retails sales m/m from Canada.
|Currency Pair||Interbank Rate||% Change on Day|
|Time (GMT)||Region||Data Release||Forecast||Previous|
|12:30||EUR||ECB Monetary Policy Meeting Accounts|
|13:30||CAD||Core Retail Sales m/m||0.9%||-0.7%|
|13:30||CAD||Retail sales m/m||0.9%||-0.3%|