Autumn Statement Drives Election Speculation – Sterling Update

Autumn Statement Drives Election Speculation – Sterling Update

Here’s the latest currency news from our partner Moneycorp, to help you find out what your money is worth.


The biggest news of the week came from the Autumn Statement on Wednesday 22nd November. The government’s announcement didn’t significantly impact the pound (it fell 0.6% against the dollar in the immediate aftermath), however, it did drive speculation around the next general election, seemingly fuelling speculation around a snap election in the spring. The FTSE100 also fell by 0.4% on the day, but there appeared to be an uptick in the price of shares in pub companies, thanks to the alcohol duty freeze.

Chancellor Jeremy Hunt cut National Insurance by more than expected, taking the tax rate from 12% to 10% from the 6th January. Two self-employment National Insurance taxes were also scrapped or reduced, saving the average self-employed person £192 per year.

Businesses were the big benefactors of Hunt’s ‘110 measures for growth’, with his decision to make ‘full expensing’ permanent, which represents a tax cut of about £10bn.

The Office of Budget Responsibility also downgraded the UK’s growth forecast. GDP is now expected to rise by 0.6% this year, higher than the previously expected -0.2%. However, the OBR is now predicting the UK will only see growth of 0.7% in 2024 and 1.4% in 2025, compared to the more positive 1.8% and 2.5% in 2024 and 2024, respectively, it had forecast in March this year.

The deceleration of inflation is also now expected to be slower, with the UK only meeting the Bank of England’s 2% target in the first half of 2025.

Thursday also saw the UK release its monthly PMI data, with its Services PMI showed a surprise return to expansion yesterday after it crept back over the key 50 thresholds (50.5), significantly higher than the 49.5 expected by markets. The Manufacturing PMI also came in above expectations at 46.7 but still indicates industry contraction.

After the stronger-than-expected data, the pound rebounded against the dollar yesterday, pushing the rate to above $1.25. Given the US holiday yesterday, the currency reaction was perhaps a bit muted, but we’ll be keeping an eye on the pair – now it is back to business across the pond with its Services and Manufacturing PMIs released today.

Next week is relatively quiet on the data front for the UK, although the Bank of England’s Governor Andrew Bailey is due to deliver a short speech at the 50th Anniversary of the London Stock Exchange on Wednesday 29th November.



We saw a host of Manufacturing and Services PMI data released from across the European Union and the UK this week.

The downturn in business activity seemed to ease this month, with the composite PMI Output Index for the Euro Area rising to 47.1 from October’s near three-year low of 46.5. The outcome was above analysts’ forecasts, but it remains below the key 50 mark that would indicate growth.

The services sector PMI rose to 48.2 from 47.8, and the manufacturing industry PMI rose to 43.8 from 43.1, both beating expectations but remaining significantly below the key 50 thresholds again.

Data was also released for Germany and France. Germany’s contracting economy showed signs of easing this month, with composite PMI data rising to 47.1 from 45.0 after both the manufacturing and services PMI data came in higher than expected. France’s business activity also contracted again this month, but with both the service and manufacturing PMIs coming in lower than expected.

There was little reaction from the EURUSD, perhaps due to the Thanksgiving holiday.

Next week, CPI inflation data is due to be released across the region.

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