GBP rises but faces pressure ahead of UK budget
Written by
Daily Currency Update
The pound is rising against the US dollar, but these gains appear fragile ahead of Wednesday’s UK budget announcement. Chancellor, Rachel Reeves is expected to confirm that she has less than £10 billion in budget headroom, limiting her ability to stimulate economic growth. This could lead to signals' of higher taxes or reduced government spending - both of which are growth-negative. Given the FX market’s heightened focus on economic outlooks, sterling may struggle to hold its gains, even as the dollar softens.Key Movers
Global markets are bracing for heightened volatility as the US prepares to escalate its trade war next month. President Donald Trump declared April 2 as “Liberation Day,” when he was set to unveil “reciprocal tariffs” targeting countries he believed were disadvantaging the US in trade. This move could significantly expand the scope of tariffs imposed on both allies and rivals, increasing uncertainty in global trade flows.FX markets are likely to see heightened risk aversion, with safe-haven currencies such as the US dollar, Japanese yen, and Swiss franc potentially benefiting.
Expected Ranges
- GBP/USD: 1.2945 - 1.3025 ▲
- GBP/EUR: 1.1925 - 1.1995 ▲
- GBP/AUD: 2.0535 - 2.0635 ▲
- EUR/USD: 1.0805 - 1.0895 ▲