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UK awaits Wednesday’s budget announcement

Tuesday 22 March, 2022

Daily Currency Update

It was a relatively quiet day for the pound yesterday, but it has seen a slight rebound from its drop off last week, pushing up to around 1.1980 vs the euro and 1.3190 vs the US dollar. This could have been down to Rishi Sunak’s comments yesterday where he stated that the UK must take “a responsible approach to public finances” due to ongoing global uncertainty. Looking ahead the main focus for the pound this week will be the release of Rishi Sunak’s budget tomorrow. Bank of England Governor, Andrew Bailey, is also due to speak.

Key Movers

US Federal Reserve Chair, Powell, gave a speech yesterday and stated that they would be open to a 50bp interest rate hike soon if certain conditions are met. The markets are now pricing in further potential rate hikes before the end of the year. European Central Bank President Lagarde dampened concerns surrounding stagflation in the euro area yesterday, saying that the ECB will not rush to raise their interest rates. The euro weakened off the back of these comments falling 0.6% vs the pound and 0.5% vs the US dollar, and it continued its losses this morning. There are six European Central Bank speakers today to watch out for including ECB President Lagarde and Chief Economist Lane.

Expected Ranges

  • GBP/USD: 1.3115 - 1.3210 ▲
  • GBP/EUR: 1.1925 - 1.2005 ▲
  • GBP/AUD: 1.7740 - 1.7835 ▼
  • EUR/USD: 1.0950 - 1.1045 ▲