FX roundup: Sterling hits wall-of-red ahead of Hammond's Autumn Statement soapbox
Sterling hit a wall-of-red performance on most major crosses on Tuesday afternoon, ahead of Wednesday's Autumn Statement by UK's Chancellor of the Exchequer, Philip Hammond.
"Ahead of tomorrow's Autumn Statement sterling remains weak, dropping back from yesterday’s highs above $1.25," said Chris Beauchamp, chief market analyst at IG.
He said it was obvious Hammond faced a difficult set of choices, with little wiggle room.
"Given the still murky path ahead for the UK economy (since the Brexit vote), it is hard to see how Mr Hammond can do more than tinker around the edges," Beauchamp added.
"Markets will be watching closely for signs of concern about the economic outlook, which could see the pound weaken further against the dollar and the euro."
At about 17:08 GMT, sterling was down 0.59% to $1.2420 and lower by 0.56% to €1.1687. The dollar-spot index was off 0.02% to $101.030.
The British unit was markedly softer against the dollars of Australia, Canada and New Zealand, also slipping versus Japan's yen and South Africa's rand.
Chris Saint, senior analyst at HL Currency Service, said sterling struggled to make headway against its global peers after Monday's strong gains.
"Sterling’s decline to daily lows of $1.2423 against the US dollar and €1.1687 versus the euro came despite UK government borrowing falling to £4.8 billion in October," said Saint, commenting prior to the market's close.
"Borrowing was £1.6bn lower than October last year largely thanks to a record amount of tax income and will be a welcome for Chancellor Phillip Hammond, as he prepares the Autumn Statement for release tomorrow," Saint added.
FTXM Research analyst Lukman Otunuga said that sterling's recent sharp appreciation -- following its chronic humiliation after the non-binding Brexit referendum in June -- now appeared unsustainable. He added that all eyes were on Hammond's Wednesday soapbox.
"While it is widely expected that there will be some moderate spending on infrastructure and housing stimulus from the statement, an aggressive forecast signalling to a stronger economic recovery could support Sterling," Otunuga said.
Meantime, the greenback turned in an overall mixed performance on the crosses. It was down against the euro, aussie and safa, but eked out gains on the loonie, kiwi and yen.
The market is increasingly pricing in a US interest rate hike in December.
"It seems Sterling has been tainted by the Brexit woes with any appreciation achieved seen as another ticket for bears to drag prices even lower," Otunuga said.
"From a technical standpoint, the GBPUSD bears need to conquer $1.240 for a decline lower towards $1.220."