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Only a little more movement

Budget fails to electrify sterling

Philip Hammond's pre-Brexit Budget (or maybe his pre-Brexit-Budget Budget if there is no deal) went roughly according to plan. Investors took it in their stride: between the beginning and end of his speech there was no change to the pound's value against the euro or the US dollar.

As most commentators anticipated, the chancellor used a windfall upgrade in the Office for Budget Responsibility's economic and revenue forecasts to spread a little cheer. The partisan press reacted predictably to his measures, the Daily Mirror objecting to his parsimony and the Daily Telegraph praising the chancellor's spirit.  

If investors were to take anything away from the Budget it was those OBR forecasts which had come in so handy for the chancellor. The growth projections, though upgraded, still look anaemic; 1.6% in 2019, followed by 1.4%, 1.5% and 1.6% in 2023. There was no rush of post-Budget euphoria to bring out the buyers and sterling was slightly lower on the day, on average. It lost a third of a US cent, gained half a yen and was steady against the euro and the Swissy.

Tariffs and T-bonds

The sense in Washington was that the US administration is readying the stage for its next - and presumably final - tariff assault on Beijing but a comment by the president to his Fox friends during an interview later in the day somewhat complicated the picture. Italian government bonds recovered after Standard & Poor's failed to downgrade them.

There seems little chance that Trump will shrink from playing his final card in the tariff poker game; the imposition of taxes on all Chinese goods that have not already been hit. The president himself muddied the water later when he told an interviewer that America could get "a great deal" on trade even though China isn't yet ready for a deal. The Australian dollar moved higher on the news, eventually adding a quarter of a cent against sterling.

S&P's failure to downgrade Italy was positive for Italian debt but had little effect on the euro. Any enthusiasm among investors was tempered by German chancellor Angela Merkel's announcement that she will not seek re-election.

Euro zone GDP

A fair few ecostats will be emerging from Euroland today. Foremost among them will be the first estimate of third quarter gross domestic product.  Britain's contribution will be  the Confederation of British Industry's Distributive Trades Survey, which measures retail sales. Bank of Canada governor Stephen Poloz will be speaking this evening.

Alongside the Euroland GDP estimate, wherein analysts expect quarterly growth of 0.4%, there will also be figures for consumer, investor and business confidence this morning. Germany supplies the remainder of the European data, with unemployment and inflation numbers.

The only US statistic is for house prices and there is nothing from Canada.  Tonight New Zealand reports on building permits and  business confidence and Japan reveals its industrial production data for September.

GBP largely unaffected by Brexit Budget

GBP largely unaffected by Brexit Budget

AUD gains on Trump interview

AUD gains on Trump interview

EUR flat after S&P/Merkel trade-off

EUR flat after S&P/Merkel trade-off

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