FX round-up: sterling helped higher post budget, weaker dollar lends a hand

The pound received a boost higher on Wednesday following the delivery of the Chancellor's budget, while the greenback fell for a second day.

Cable whipsawed down to 1.3214 and then back up passing resistance at 1.3266 as Chancillor Philip Hammond delivered the autumn budget in parliament.

The Treasury decided to help first time buyers by scrapping stamp duty for properties up to £300,000 as well as freezing fuel and alcohol duty.

On the downside, The Office for Budget Responsibility (OBR) downgraded the UK's growth forecast for 2017 from 2% to 1.5% and in 2018 from 1.6% to 1.4%.

Slower economic growth will mean lower tax revenues for Hammond, adding to the challenge of meeting his targets to improve Britain's public finances.

Market participants seemed to have liked what they heard as they bid cable up 0.26% on the day to 1.3273 by 1544 GMT.

Stirling's move higher was also aided by a weaker dollar as data out on Wednesday showed that durable goods orders were well below expectations, coming in at, -1.2% versus 0.4%.

On the upside for the US, unemployment claims fell to 239,000, beating expectations of 241,000. Unfortunately this was not enough to stop the dollar index falling 0.48% to 93.502 against a basket of currencies.

Focus for the day will shift towards the FOMC meeting minutes due to be released at 1900 GMT, where observers are looking for further clues to any rate hikes.

"The monetary policy side of things is unlikely to provide any momentum for the dollar exchange rates until year-end," Commerzbank strategists said in a note.

The euro surged higher against it's US counterpart on Wednesday, trading 0.44% firmer to 1.1790, rallying for a second day as investors adjusted positions on bets that the German coalition collapse will not have any impact on a brightening outlook for the European economy.

On Thursday, the European Central Bank (ECB) releases their October monetary policy meeting account, which some observers hope will outline their quantitative easing exit strategy.

"The Thanksgiving week holiday is making markets a bit more quieter than usual and currency markets will look forward to the minutes of the ECB meeting on Thursday," said Christin Tuxen, an FX strategist at Danske Bank.

Against the pound, the single currency traded fairly flat with GBP/EUR moving only 0.06% lower to 1.1271.

Dollar weakness was seen across the board, thanks to negative US data as well as softening US treasury yields, with the Japanese yen and Swiss franc being the greatest beneficiaries.

Over in Asia, USD/JPY traded 0.79% lower to 111.56, a level not seen since 26 September where it found good support. Japan will be on a public holiday along with the US on Thursday, so reduced volumes are expected.

A little closer to home, USD/CHF fell 0.88% to 0.9827, the lowest it has been since 20 October. The Swiss National Bank (SNB) governor, Thomas Jordan, is expected to deliver a talk on Thursday titled: "High current account surplus of Switzerland: consequences for the monetary policy of the SNB."

The Australian dollar managed to push higher on Wednesday with AUD/USD trading 0.13% firmer to 0.7587, breaking resistance at 0.7574 and looks to be heading to 0.7600 were it could face further resistance overnight (circa 16 November).