The main attraction for the day is the upcoming unveiling of the infamous, Autumn Budget from UK Chancellor of Exchequer Rachel Reeves, which could potentially cause a destabilisation in bond and FX markets.

The Chancellor has, time and time again, reiterated her “iron clad commitment” at saving the UK from its fiscal troubles, underscoring her moral conviction that the situation in the UK needs a fix-up now and that austerity must be adopted to address those inconsistencies.

She now needs to tackle these rough fiscal conditions and attempt to fill the UK’s fiscal hole with harsh tax increases, conducting at the same time a delicate balancing act of appeasing both capital markets and the Party.

Is £15bn, enough ceiling room for the government to survive? Or more must be raised by incoherent tax hikes on every single other thing left that is not already taxed?

By partly pleasing both the gilt markets and her party, she may survive to live another day. Even if she does survive the day however, the question still remains about what she will do next, since the issue is rather too complex to be dealt with, without extreme measures. More concrete productivity-induced measures must be introduced to safeguard a long-term recovery of the nation.

Even though the plans are being sold as a measure of easing citizens’ problems, analysts point out that the proposal in rather targeting back-benchers in the political sphere but also gilt hawks in debt markets.

Many prominent figures have declared that the expected, austere tax hikes could put the UK on a “road of decline” in the foreseeable future. Virtually none believes these measures will be uplifting, yet at the same time, all agree than the can, cannot be kicked further down the road. Action must be taken. Fiscal consolidation is needed for gilts to rally from here onwards and breed stability.

Businesses have been holding their breath, pausing investment decisions awaiting for the announcement. Reductions in workforce, large scale of redundancies keep rolling in. Growth is a major issue for Uk economy, needs revival as soon as possible.

Technical Analysis

GBPUSD Chart – The Pound float near the $1.32 area ahead of Reeve’s budget unveiling

Resistance: 1.3200 (R1), 1.3300 (R2), 1.3450 (R3)
Support: 1.3000 (S1), 1.2860 (S2), 1.2720 (S3)