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Hello everyone, today XM Forex will bring you "[XM Official Website]: Increases may be limited after the budget". Hope this helps you! The original content is as follows:
XM Foreign Exchange APP News - On Thursday (November 27), GBP/USD first fluctuated upward during the day, reaching an intraday high of about 1.3267, and then fell back quickly. In the short term, the GBP/USD exchange rate will still be dominated by the response to the budget. There is no important macro data released by the UK and the US, and the US is in the midst of the Thanksgiving holiday, so global market trading is expected to be light. The dovish tone of the Federal Reserve dominates the current fluctuations in the pound/dollar exchange rate, which is largely affected by the www.xmxmxm.cnbined impact of U.S. economic data, the Fed's policy guidance and changes in leadership expectations. Although the U.S. dollar rebounded slightly from a one-week low, causing GBP/USD to show weakness in the 1.3265-1.3270 range in early European trading, this rebound in the U.S. dollar is more of a technical correction and is difficult to form a trend strength. The Federal Reserve's dovish stance constitutes a core suppression. Recent economic data in the United States have shown a mixed trend, but they have not shaken the market's core expectations for the Federal Reserve to cut interest rates in December. On the one hand, the producer price index was in line with expectations, sending a positive signal of easing inflation; retail sales growth in September was lower than expected, which to some extent offset previous optimistic data - new orders for durable consumer goods increased by 0.5% in September, exceeding expectations, and the number of initial jobless claims fell to a seven-month low in the week ending November 22. This differentiation just provides rationality for the Federal Reserve to continue to ease. The CMEFedWatch tool shows that the current market expectation is that the probability of an interest rate cut in December has reached 84.9%. This expectation directly inhibits the appreciation of the US dollar. Potential changes in the leadership of the Federal Reserve will have long-term effects, further limiting the dollar's rebound space. White House National Economic Council Director Kevin Hassett, a close ally of Trump, has emerged as a favorite to succeed the Federal Reserve chairman. The market generally expects that he will implement his demand for a substantial interest rate cut after taking office, which significantly reduces theWeakened the dollar's safe-haven appeal. At the same time, the overall optimism in the market www.xmxmxm.cnbined with speculation that Federal Reserve Chairman Powell may be replaced has jointly constituted resistance to the upward trend of the US dollar and provided underlying support for the GBP/USD exchange rate. Reeves's tax increase policy British Finance Minister Rachel Reeves announced the 2025 autumn budget on November 26. With "stabilizing expectations" as the main line, she continued the path of increasing taxes and expanding expenditure simultaneously, trying to find a balance between fiscal balance and political stability. The most attention-grabbing adjustment in this budget is to raise the economic growth forecast for 2025 to 1.5% from the previous 1%. In his speech, Reeves announced a tax increase for all people, with a total tax increase of approximately 40 billion pounds. This move promoted the pound/dollar exchange rate to rebound. The new tax revenue will be mainly used to expand welfare expenditures and reserve fiscal space to deal with future economic shocks. This tax increase covers areas such as landlords (the tax burden may be passed on to tenants), dividends and luxury homes. Analysts pointed out that tax increases may slow economic growth and trigger the risk of capital outflows. Despite the above concerns, Reeves' statement still boosted the performance of British assets: the 10-year British government bond yield fell to 4.42% from this week's high of 4.629%, and the FTSE 100 index rose 0.85%. One of the core reasons for the strength of British assets is that most major tax increases will be postponed until after the next general election (the general election needs to be held before the summer of 2029 at the latest), which will not have a direct impact on the economy in the short term.
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