Magna Financial Market Report – Friday 25th October 2024
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- USD softens despite strong PMI and jobless claims data.
- GBP gains as markets await budget details and potential tax hikes.
- US and Japan elections keep investors on alert.
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RECAP
USD unexpectedly slipped yesterday despite favorable PMI data and lower jobless claims, as treasury yields pulled back. This shift came as a surprise, given the generally positive economic indicators.
On the other hand, GBP saw gains across the board, despite underwhelming PMI figures. Chancellor Rachel Reeves announced she would create £53 billion in additional borrowing room by adjusting a key debt measure in the upcoming budget. The IMF welcomed the move but issued a cautionary note about the need to control the UK’s debt, which is now at its highest level in six decades.
Meanwhile, Prime Minister Keir Starmer stirred speculation of potential tax hikes for investors, stating that those earning from stock holdings should not be considered “working people.” This has added more weight to next week’s budget expectations.
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OUR SUMMARY
JPY is under focus today ahead of snap elections in Japan, where the ruling party risks losing its majority in the lower house, creating political uncertainty.
As we approach the weekend, the momentum behind USD could ease slightly, with much of the recent drivers already factored into the market. Any potential softness in USD is expected to be temporary, with its overall strength likely to persist.
Meanwhile, GBP faces potential volatility around the upcoming budget, particularly in the gilts market. The subdued response to Rachel Reeves’ borrowing plans may suggest complacency, but any sudden moves in gilts could expose GBP to significant downside risks.
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HOW WE CAN HELP
Our team of currency experts are here to help you get more from your money when making international payments. We will work with you to understand your payment needs and offer specialised guidance on the best options available to you. Get in touch with Osman Hanif today on +44 (0) 20 3371 9200 or email osman@magnafinancial.com
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