Pound steady ahead of UK spending review

Britain's Chancellor of the Exchequer Rishi Sunak attends a TV interview in London, Britain November 22, 2020. REUTERS/Simon Dawson
Britain's Chancellor of the Exchequer Rishi Sunak attends a TV interview in London, Britain November 22, 2020. Photo: REUTERS/Simon Dawson

The pound held steady against the euro and dollar on Wednesday, ahead of the UK spending review and as Brexit trade talks rumbled on.

Sterling was flat against the euro at €1.1234 (GBPEUR=X) in early trade in London and was up 0.2% against the dollar to reach $1.3383 (GBPUSD=X).

UK Chancellor Rishi Sunak is set to deliver a spending review — akin to a mini-budget — in parliament later today. The statement, which is expected around 12.30pm, will set out government department budgets for the 12 months ahead, as well as new spending commitments.

WATCH: The Spending Review: what you need to know

Several key announcements have already been leaked to the press, including an additional £3bn ($3.95bn) in NHS funding, over £4bn to help unemployed people find work, and plans to create a new National Investment bank to focus on “levelling up” the regions.

The Office for Budget Responsibility (OBR) will publish forecasts for the UK economy alongside the spending review. The forecasts are expected to show the worst outlook for the UK economy in 300 years and show public finances will be suffering the effects of the pandemic for years to come.

“All eyes will be on the Chancellor of Exchequer,” said Naeem Aslam, chief market analyst at Avatrade.

Elsewhere, Brexit trade talks continued to be in focus. Talks continue virtually on Wednesday. Brexit has been the main driver of sterling movements since the 2015 EU membership referendum.

READ MORE: Rishi Sunak pledges £2.9bn to help 1 million people find work

US president elect Joe Biden weighed in on negotiations overnight. Biden told reporters that a hard border between Ireland and Northern Ireland would be “just not right”.

“We do not want a guarded border,” Biden, who is of Irish heritage, told reporters.

Biden previously publicly spoke out on the issue in September, warning Boris Johnson against threatening the Good Friday Agreement. It came as the UK Prime Minister announced plans to break international law through the controversial Internal Markets Bill.

WATCH: Tricky week ahead for Rishi Sunak that may yield tax rise hints