Wednesday, 23 November 2016

Will the pound go up or down?

The GBP/USD cross had dipped back under $1.24 this morning as markets wait in anticipation for the governments autumn statement, which is due to be released at 12:30 GMT.

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So far today the pound has lost nearly 0.3 per cent against the dollar, with the currency pair falling from $1.2406 to a low of $1.2370, as you can see from the graph below.

GBP/USD graph.

This morning's move means the GBP/USD cross has now fallen over one per cent since hitting a high of $1.2511 on Monday, which in monetary terms means purchasing $300,000 this morning now costs around £2,700 more than it did two days ago.

How could today's autumn statement impact the pound?

At the moment there seems to be a split amongst analysts as to whether the pound will be receive any kind of boost from Phillip Hammond's statement this afternoon.

The statement will give us an updated economic outlook, and will provide us with an insight to the government's budget for the year ahead, projected borrowing, and their objectives.

It will also include comments on the latest economic forecasts from the Office of Budget Responsibility (OBR). The OBR will provide forecasts for up to five years into the future but with Brexit looming these predictions could have an impact on the pounds value this afternoon.

If the growth forecasts are cut drastically as a result of the uncertainty the UK economy is currently facing, then we could see the pound suffer. However, if Mr Hammond announces the government are going to increase spending in an attempt to boost the economy, then it is possible the pound could claw back the ground it has lost over the past couple of days.

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