Sterling Slides Further as UK Fiscal Concerns Persist, UK-China Trade Efforts Fail to Reassure Markets
| Action Insight Daily Report 1-13-25 |
Sterling Slides Further as UK Fiscal Concerns Persist, UK-China Trade Efforts Fail to Reassure Markets |
Sterling extended its losses at the start of the week as deepening concerns over the UK’s fiscal situation continued to dominate market sentiment. Yields on 10-year UK Gilts surged above 4.88%, inching closer to the psychologically significant 5% mark. Market participants remain skeptical about the government’s fiscal discipline, despite repeated reassurances from Chancellor Rachel Reeves. At a press conference in China, Reeves reaffirmed her commitment to fiscal responsibility, stating, "We will pay for day-to-day spending through tax receipts and we will get debt down as a share of GDP." However, these declarations fell flat with the markets, which is ore focused on the UK’s mounting fiscal challenges and sluggish economic growth. Reeves’ attempts to rejuvenate UK-China trade ties also failed to make a meaningful impact on sentiment. During her visit to Beijing, she announced trade and investment agreements worth GBP 600m over the next five years, following discussions with Chinese Vice-Premier He Lifeng. However, markets dismissed the news, viewing it as insufficient to offset broader economic and fiscal challenges. Domestically, Reeves faced criticism for engaging too closely with China, with some accusing her of compromising national interests for limited gains.... |
GBP/JPY Daily Outlook Daily Pivots: (S1) 191.61; (P) 193.20; (R1) 194.19; More... GBP/JPY's decline from 198.94 continues today and intraday bias remains on the downside. Deeper fall would be seen to 188.07 support. Firm break there will argue that corrective pattern from 180.00 has finished too, and larger decline from 208.09 might be ready to resume. On the upside, above 192.89 minor resistance will turn intraday bias neutral first. But risk will stay on the downside as long as 55 4H EMA (now at 195.22) holds. | |
| GMT | Ccy | Events | Actual | Forecast | Previous | Revised |
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| 21:45 | NZD | Building Permits M/M Nov | 5.30% | -5.20% | | 00:00 | AUD | TD-MI Inflation Gauge M/M Dec | 0.60% | 0.20% | | 03:00 | CNY | Trade Balance (USD) Dec | 104.8B | 100.0B | 97.4B | | 08:00 | CHF | SECO Consumer Climate | -30 | -38 | -37 |
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