RECAP
UK assets saw a sharp drop yesterday as concerns grew around Chancellor Reeves’s budget, with gilt yields rising as the budget’s potential inflationary impact led markets to reduce BoE rate cut expectations for the coming year. Although this typically supports GBP, investor sentiment was notably negative, prompting a sell-off across UK assets, including the pound, on fears of over-borrowing.
As a result, GBPUSD reached a two-month low, and GBPEUR hit its lowest in a month. Meanwhile, in the eurozone, CPI rose to 2% year-on-year, lifting the EUR as market bets on a 50bps rate cut in December dropped to 15%. USD traded sideways ahead of today’s jobs data, with core PCE figures aligning with predictions.
