In what is expected to be a quiet week for UK economic data, today Philip Hammond's Spring statement is due to be unveiled, with revised economic and fiscal forecasts expected to be the focus. The below table displays the movements for a number of Sterling currency pairs during the last 30 days:
|Currency Pair||% Change||Difference on £200,000|
It’s a quiet week for UK economic data, therefore political events will dictate the value of sterling. Today UK Chancellor of the Exchequer Philip Hammond will deliver his Spring budget update at the House of Commons. Mr Hammond made it clear at his budget in the Autumn, that the spring budget is low key and there will be no tax and spending changes. Financial institutions are suggesting that the budget will last 15 minutes and the main focus will be the revised economic and fiscal forecasts published by the Office for Budget Responsibility (OBR). At the Autumn budget the OBR downgraded growth forecasts due to the uncertainty surrounding Brexit. The downgrades were from 1.5% to 1.4% for the next 12 months and 1.7% to 1.3% for the year after.
Most media outlets are suggesting the budget will start at 12.30pm. Some would argue that this budget could be a non-event, as that is what the market is expecting, however I wouldn’t bet on that.
However, it appears that there was no need for the OBR to downgrade the forecast as the UK economy has performed well since the Autumn budget. The UK produced its strongest growth figures over two consecutive quarters (three and four last year) since 2011 and today many economists believe the OBR will upgrade growth forecasters for the next 12 months back to 1.5%. In addition, with growth numbers exceeding expectation forecasters are suggesting that the Chancellor should be able to announce that the budget deficit will be €40bn lower over the next 5 years, compared to the OBR Autumn predicted. Therefore, this should be a positive budget for the Chancellor. For clients purchasing the pound this week, I would be tempted to trade before the budget to avoid a potential strengthening pound.
In other news the European Government officials from the 27 countries will get together this week to discuss the UK’s approach in regards to Brexit. Last week the Europeans published a document suggesting the UK are still trying to ‘cherry pick’. I would guess that we will receive similar commentary which shouldn’t provide any shocks to the market. For clients that are buying or selling the pound in the upcoming weeks, I would recommend outlining your position to your account manager and they will keep you up to date with regular Brexit updates.
For further news on upcoming events and data releases that could affect your currency requirement, call our trading floor on 01494 725 353 or email me directly at firstname.lastname@example.org.
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