Sunak relief rally in Sterling is starting to decrease, causing traders to turn back to fundamentals, and technicals, to value the currency. Sterling has performed better than many currencies since Rishi Sunak took over No.10.
Yesterday’s announcement reflected that the mini-budget would be pushed back from October 31 to November 17 and raised the British currency by a Pound. According to Foreign Minister James Cleverly, both PM Sunak and Chancellor Hunt desired to ‘get it right ‘ and ensure next month’s budget harmonized with the government priorities.
GBP/USD is trading on either side of 1.1600, aided partly by the US dollar weakness. The Fed is expected to hike rates by 75 basis points at its next meeting, and traders are now looking for clues that the central bank may begin to ease back on additional, oversized rate hikes.
Today’s advanced look at US Q3 GDP, released at 13:30 BST, will give the market an idea of how recent rate hikes have affected the US economy in the third quarter, and any miss or beat of expectations will shift the Fed rate hike narrative again.
Cable is now mid-range between first-line support at just under 1.1500 and resistance at 1.1740. The pair may look to consolidate in this range over the next few days ahead of next month’s Fed (November 2) and BoE (November 3) monetary policy decisions.