Ian Tew, Head of G10 FX Spot Trading, provides commentary on the anticipated currency movements in the run-up to the Autumn Statement

Interest has returned for the pound. Going into the ‘Mini Budget’, positions were bearish with a negative narrative for the UK lacking credibility and stability, subsequently resulting in the volatile trading of sterling. Going into the Autumn Statement, we have seen a big reduction in the negative narrative, with short positions reducing significantly.

The austere nature of the Autumn Statement is likely to impact growth. Sterling against the dollar has been a dollar trade, but the dollar has given back some of its gains in recent weeks.

Volume is a good indicator of conviction, and the volumes we saw post-Mini Budget were two to three times more than the 90-day average. Whilst volumes continue to remain high, participation rates are lower and the focus is on risk reduction rather than new additional risk.