Extremely low volatility being seen in the market so far this week (thankfully)..
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| "The government is not on track to meet its 'stability rule'. Substantial adjustments in the Autumn Budget will be needed if the Chancellor is to remain compliant with her fiscal rules".
This was the headline overnight from the UK's longest independent research institute, NIESR. The firm is an outlier and previously forecast a £60bn financial blackhole (now £50bn), so what they report isn't necessarily fact, but still it has hurt the Pound via investors and traders.
The guidance suggests a tax rise of 5p to the pound is sufficient to close out the spending hole, IF, the fiscal rules remain. NIESR believe the Bank of England will move interest rates down to 3.75% by year-end (along with consensus), but the move is too late to boost economic growth.
Reports like this create nervousness and uncertainty and as we all know full well by now, that's bad for business as far as the Pound is concerned.
It has been a very 'slow' week in terms of trading volatility which is to be expected in this low liquidity month. Hopefully more of this is to come, but let's see what tomorrow brings first.. |
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