GBP - British Pound
The UK budget was delivered by chancellor, Rishi Sunak, yesterday. The UK economy is forecasted to return to pre-COVID levels by 2022, which is much faster than previously expected.
Annual growth is expected to rebound by 6.5% this year, up from the previous estimate of 4%. Unemployment is expected to peak at 5.2% next year, much lower than the 11.9% previously expected. Borrowing as a percentage of GDP is expected to fall to 1.5% over the next 5 years.
Despite all the positive headlines, GBP took little direction from the release, continuing to move within recent ranges against the USD and EUR. GBP/USD touched 1.3710 at the lows and 1.3775 at the highs. GBP/EUR ranged between 1.1815 and 1.1875.
UK data releases are expected to be of low impact now until next week. As this is the case, pound movement will likely take direction from post-Brexit headlines as tensions between Britain and France grow over fishing rights. This is in a backdrop of ongoing negotiations to try and amend the Northern Ireland protocol.
Today we anticipate the European Central Bank interest rate decision where no change in policy is expected.
However, it is the comments over the expected levels of inflation as we head into 2022 and whether ECB chief Christine Lagarde sees it as temporary. If temporary, for how long and whether there will be a need for aggressive action.
With the Pandemic Emergency Purchase Program scheduled to end in March, any clues on an extension to this program, or whether a new program will be introduced to take its place, will likely be looked out for by investors.
This could certainly add to EUR volatility today but may also have little impact. The announcement will commence from 12:45pm.
1.3710 - 1.3820 ▲GBP/EUR:
1.1790 - 1.1920 ▲GBP/AUD:
1.8240 - 1.8350 ▼EUR/USD:
1.1540 - 1.1660 ▼