UK FISCAL: Budget Timings

• The Sun on Sunday also runs that the 5p/litre "temporary" cut to fuel duty is expected to be scrapped. This would of course raise revenue (around GBP900mln per year). But would not help with Reeves' pledge to help cut the cost of living.
• Former PM Rishi Sunak wrote an op ed in Sunday Times. He urges Chancellor Rachel Reeves to increase headroom at the Budget. One of the more interesting points he notes is that he notes that Reeves would probably not be discussing increasing the headroom if she wasn't given opening numbers from the OBR that had been better than those at the more pessimistic end of the range. Most of the rest of the interview was broadly in line with what you would expect from a former leader of the opposition.
• There are also continued reports that supermarkets are lobbying against any increases in business rates - noting that margins for supermarkets are incredibly thin. And that any increase in taxes would lead to further increases in food prices.
• A number of media reports point to reductions in the cash ISA limit to GBP10k from GBP20k (this has been speculated on for a long time now so isn't huge news).

• RES 4: $4443.8 - 3.618 proj of the May 15 - Jun 16 - 30 price swing
• RES 3: $4404.9 - 3.500 proj of the May 15 - Jun 16 - 30 price swing 
• RES 2: $4400.0 - Round number resistance
• RES 1: $4186.4/4381.5 - Low Oct 17 / High Oct 20 and the bull trigger                
• PRICE: $4071.8 @ 07:14 BST Oct 27
• SUP 1: $4004.3 - Low Oct 22  
• SUP 2: $3944.9 - Low Oct 9
• SUP 3: $3832.4 - 50-day EMA
• SUP 4: $3819.6 - Low Oct 2 

A sharp pullback in Gold last week appears corrective - for now. Note that the trend is overbought and a deeper retracement would allow this condition to unwind. Attention is on support at the 20-day EMA, at $4052.6, has been pierced. A clear breach of the average would signal scope for a deeper retracement, potentially towards the 50-day EMA, at $3832.4. Key resistance and the bull trigger has been defined at $4381.5, the Oct 20 high.

Last week the Guardian broke the news that income tax hikes were being discussed by the Treasury (although noted that Chancellor Rachel Reeves was still not sure if she wanted to break a manifesto pledge). Some of the weekend news has fleshed out these stories.

• The Sun on Sunday (link here) has run a sourced story that the income tax rise under consideration is 2ppt. This is the top end of expectations - we had expected 1-2ppt to be under discussion. However, it is probably too much to read into this that 2ppt will be the eventual outcome - it would be strange to not at least discuss 2ppt if any income tax raise was under consideration. The article runs with the numbers of around GBP20bln/year additional revenue. This is presumably from a 2ppt increase to both basic rate and higher rate. Based on the Treasury's January estimates a 1ppt increase to basic rate would raise around GBP8.2bln/year and higher rate GBP2.1bln/year.
• The Independent (link here) runs a story on potential increases to the additional rate of income tax - or potentially lowering the threshold where it kicks in (currently just above GBP125k). However, as the story notes there are already kinks in the tax code that make lowering the threshold problematic. At GBP100k the personal allowance is gradually withdrawn, leading to an effective tax rate of 60%. So reduction to GBP110k for example would lead to a marginal tax rate of 67.5%. Alternatively raising the 45% rate by 5ppt would only raise a little more than GBP1bln/year.
• Remember, that we look at the options for income tax, VAT and national insurance increases in our analysis piece here.