GBPUSD is waiting for a budget catalyst
The pound edges higher as Britain may look to restore markets’ confidence with a new budget. Sterling has made up the losses from the September budget firesale. Traders are awaiting a new announcement while riding on the dollar’s softness. Heightened volatility could be expected this week as British finance minister Jeremy Hunt presents his plan to fill a £50 billion fiscal hole. After the market sanctioned Mr Kwarteng’s unfunded tax cuts, fiscal discipline with a mix of public spending cuts and tax rises would alleviate worries about Britain’s finances. 1.2300 The next hurdle is the recovery process. 1.1150 The closest support.
Lower inflation causes USDJPY to fall
The prospect of a narrowing US-Japan interest differential saw the Japanese yen soar. After months of parabolic rides, traders finally had an excuse to exit a crowded trade when the US CPI was weaker. The market has been watching Japan’s falling foreign reserves and pondering whether Tokyo would commit more of its war chest to prop up its currency. But now a greater fall than the one from Japanese authorities’ intervention indicates that prolonged weakness has released the reversal tension, making…