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Will the UK spring budget update boost the pound?

business-articlesWill the UK spring budget update boost the pound?
  • UK growth forecasts set to be revised
  • US inflation expected to rise  
  • Will Australian confidence improve?
Spring budget statement ahead

Sterling strengthened on Monday amid hopes that today’s spring budget statement from Chancellor Philip Hammond will contain some encouraging economic forecasts for the UK.

If the Treasury’s predictions for the UK economy have improved in light of recent data, the pound could rally against rivals like the euro and US dollar.

According to Lloyds; ‘In the first ten months of the current fiscal year, the UK budget deficit has come in well below projections. This primarily reflects higher-than-expected tax receipts. Some of this may be one- off effects, but it will still translate into a much lower budget deficit for this year than seemed likely last autumn. We also suspect that the Office for Budget Responsibility (OBR) will revise up at least modestly its forecasts for GDP growth in both this year and next, although its projections further out may be little changed.’

US inflation data in focus

While data from the UK and Eurozone is lacking today, the US is set to publish its inflation stats for February.

Annual, non-core inflation is believed to have risen from 2.1% to 2.2%. Such a result could give the US dollar a little lift as it would support the case for four rate hikes from the Federal Reserve this year. That being said, average weekly earnings figures will also be in focus.

Disappointing wage data would undo any positive impact from rising inflation.

Australian dollar could be boosted by rising confidence

During the Australasian session demand for the Australian dollar could increase if the Westpac consumer confidence index for March shows an improvement in sentiment.

Overnight, the National Australia Bank (NAB) released its business conditions and confidence measures for February.

The former rose from a negatively revised 18 to 21 while the latter slipped from 11 to 9.

Separate Australian data showed a dip in home loans.

Upcoming Data

Tuesday, 13 March
12:30   US Consumer Price Index
12:30   UK Chancellor Hammond Delivers Spring Statement
14:40   Bank of Canada Governor Poloz Speech
21:45   New Zealand Current Account Gross Domestic Product Ratio
23:30   Australia Westpac Consumer Confidence Index
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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