Daily FX Update: Bank of England set to begin selling off assets – Silicon Valley Bank

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Source: Bloomberg
The Bank of England is set to become the first major central bank to sell off assets accumulated during a 13-year-old stimulus program. This decision will likely be watched closely by the BoE’s global peers as a test case for how quickly markets can shift away from easy-money policies.
Rishi Sunak’s government has said it expects all to feel the cost of higher taxes, as he seeks to fill a £40 billion hole in public finances. Both Sunak and Hunt agreed that ‘those with the broadest shoulders should be asked to bear the greatest burden’.
Euro-area economy expanded again in 3Q, with activity buoyed by fiscal support and the final leg of the post-pandemic rebound in services. Despite this surging inflation through October highlights that the final quarter will be tough, with rapidly tightening financial conditions, and a recession which remains likely through the winter.
With a 0.75% interest rate rise widely expected this week, the focus will be in the FOMC’s forward guidance. It is anticipated that Powell will signal a downshift to 0.5% in December. He may also allude to a higher terminal rate than the September projection, indicating that the hike pace is less important than the endpoint.
The RBA increased interest rates by 0.25% in a move that reiterated the central banks decision to move away from outsized interest rate hikes. The rate now sits at 2.85%, the highest since April 2013. The Aussie slipped following the RBA’s pivot as it diverges from rate expectations for the Fed and BoE. The RBA used the meeting to signal further tightening as it combats escalating inflation.
USDILS trades 0.45% lower intraday. Israel heads to the polls today as Netanyahu seeks to return. Final polls on Friday indicated that Israel’s right-wing former Prime Minister could come just one seat short of an outright majority.
UK Oct. Global/Manufacturing PMI
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