Budget day

• Focus on GBP today
• Hassett frontrunner to replace Powell

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Yesterday's currency recap

USD softened yesterday, with consumer confidence and weekly ADP payroll numbers disappointing. The EUR climbed on reports of a potential Russia-Ukraine peace deal. GBP outperformed, with traders reducing their short portions on the currency, ahead of today's much anticipated budget.

Reports indicate Kevin Hassett has emerged as the leading candidate for the next Fed Chair, moving 10-year Treasury yields below 4%. Seen as dovish and supportive of interest rate cuts, Hassett’s potential appointment could weigh on the USD in the medium term and raise fresh questions over the Federal Reserve’s independence.

The RBNZ delivered a hawkish rate cut, signalling the bank is near the end of their rate cutting cycle. The Bank cut rates by 25bps, as expected.

CPI in Australia exceeded forecasts, with the number coming in at 3.8% vs 3.6%, as expected.

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Today's GBP rates

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*Daily move - against G10 rates as of 06:00 GMT, 26.11.25

** Indicative rates - interbank rates as of 06:00 GMT, 26.11.25

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Key data points

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Today's speeches

• GBP: Rachel Reeves
  
• EUR: ECB Muller, Vujcic, Lane, Lagarde

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What we think

Today is Budget day and, whilst sentiment is still negative on GBP, we have seen some repositioning on the currency ahead of the event. Key considerations for today:
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• ‍Fiscal Headroom – Markets expect approximately £15bn; anything below could trigger renewed GBP selling.
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• Policy Messaging – The government will aim to highlight disinflation and growth, but the market reaction will hinge on actual measures.
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• Manifesto Pledges – Maintaining them adds some market tail risk; breaking them could heighten political instability and pressure GBP further.
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• Political Drivers – Shifts may be triggered by manifesto adherence, market moves, or upcoming local elections. Watch for signals from key figures, as this may influence short-term flows more than the budget itself.
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• OBR Details – Worth monitoring for updated fiscal projections.
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• Implications on BoE Policy – Markets are currently pricing in 61bps worth of rate cuts by the BoE over the next 12 months. Anything to alter this could well be driver for GBP moves after the event

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Have a great day.

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