Nov 20, 2023

The British treasury will set out its tax and spending plans for the economy this week. 

The UK Autumn Statement should add some volatility to the GBPUSD alongside US data, with FOMC minutes headlining. 

GBPUSD-–-Daily-Chart

GBPUSD – Daily Chart

GBPUSD has been moving higher and will look to test the previous support breaches around the 1.25 and 1.26 levels. Any failure at these levels could see the GBP reverse its course. 

In his statement, UK Chancellor Jeremy Hunt said he is considering cutting taxes to boost the economy, which has recently shown signs of improvement, reducing fears of recession. 

Mr Hunt said on Sunday that, when asked about the possibility of cuts to the country’s inheritance tax, “everything is on the table” in the Autumn Statement. 

“I am not going to talk about any individual taxes because that will lead to even more fevered speculation as to what I might do… what I will give you is a general view about tax,” he continued. 

“It is too high, the Conservative government wants to bring it down because we think that lower tax is essential to economic growth.” 

The Office for Budget Responsibility (OBR) is also set to publish its latest forecast alongside the Autumn Statement, and the Chancellor is expected to have billions more to play with. 

Some are concerned that introducing tax cuts could add to inflation, which has fallen to 4.6 per cent, leading to the Bank of England keeping interest rates higher for longer. 

The UK statement is released at 8pm HKT on Wednesday, and the FOMC minutes arrive at 3 pm HKT the previous day.  

The GBPUSD will be active around that period, and traders can make a plan to catch any volatility or a more significant trend into the weekend after the UK announcement, which will have growth implications for the economy. 

UK durable goods and the Michigan consumer data from the US come in 2 hours after the UK data, and both are high-level releases, so it looks set to be a midweek packed with action for currency traders. 

The US dollar index was again weak last week, dropping to 103. It may seek to test the 100 level this week.

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