Event to watch out for today:
14:30 EET. USD – GDP Volume Change
GBPUSD:
The Pound-Dollar pair is weakening near 1.3010 despite the US Dollar (USD) consolidating in the early European session on Wednesday. Investors are awaiting the release of the UK Autumn Budget, October US ADP Employment Change for October and Q3 Gross Domestic Product (GDP) due later on Wednesday.
On Tuesday, the U.S. Bureau of Labor Statistics (BLS) released Job Openings and Labor Turnover (JOLTS) data showing job openings at 7.443 million, down from August’s 7.861 million (revised from 8.04 million) and below market expectations of 7.99 million. This report could push the Federal Reserve (Fed) to dovish rates and strengthen the Dollar against the Pound Sterling (GBP).
The Fed is likely to cut its key interest rate by 25 basis points (bps) on November 7, according to all 111 economists polled by Reuters, with more than 90% expecting another quarter percentage point change at the December meeting.
As for the U.K., the government will present the first Labor Party budget in nearly 15 years on Wednesday. Rachel Reeves, the UK Chancellor of the Exchequer, may be preparing to unveil £40 billion in tax rises and spending cuts. Possible targets could include employer national insurance contributions, capital gains tax and inheritance tax relief.
Analysts at Commerzbank said that if the budget combines austerity with the hope of tackling long-term investment, “this should be positive for the pound as it would strengthen the UK’s long-term growth potential.”
Trading recommendation: Watch the level of 1.3000, if consolidated above consider Buy positions, if rebounded consider Sell positions.
Origin: FreshForex
