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UK bonds and GBP rebounded as markets welcomed Chancellor Rachel Reeves’ commitment to fiscal discipline. Sentiment improved after she raised the buffer under her fiscal rules. While investors remain wary about fiscal tightening being delayed, the overall package was viewed as more bond-friendly than expected, helping GBP recover from earlier losses.
US jobless claims came in lower than expected but USD moves were muted ahead Thanksgiving today.
*Daily move - against G10 rates as of 06:00 GMT, 27.11.25
** Indicative rates - interbank rates as of 06:00 GMT, 27.11.25
USD dipped slightly this morning as markets lean toward Fed cuts after the Beige Book signalled softer spending, mild price pressures, and weakening job trends. Risk sentiment improved, lifting NZD on strong business confidence data and hawkish RBNZ commentary. Strategists warn the medium-term outlook favours further USD weakness given the risk of the appointment of Kevin Hassett as the next Fed chair.
In the UK, the post-budget GBP bounce could well be temporary. While restrained borrowing briefly pushed GBPUSD to a one-month high, markets still expect BOE cuts starting in December. If further rate cuts come through, then GBP will lose the yield advantage that has supported the currency. Combine that with weak economic growth momentum and this post-budget rally could well be short-lived.
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