Sterling reaches midweek and – more importantly – Budget day just under 1% down compared to last week but 2% up compared to this time last month.
For GBP/USD the picture is similar but the numbers a little larger – just over 1% down compared to last week but nearly 3% up on the month.
As we passed a year since the pandemic first struck in the UK, the pound, at least, is back to excellent health, well above where it has languished for almost the entire year.
What will the Budget do to that? The economic fundamentals are that the currency markets do not like tax rises, especially when they fall on business. That’s not a comment on what is right or wrong, or what Rishi Sunak will do, or what is best in the long term, just what the chancellor’s speech might do to sterling today.
GBP was boosted yesterday afternoon when the news came through of the furlough scheme being extended, and continued support to the economy is likely to further support the pound.
On the other hand, if the market expects something to happen and it actually happens but to a lesser degree than hoped, that can knock the pound.
It’s complicated.
With the news that the EU Commission is moving ahead with a plan for vaccine passports (a “Digital Green Pass”) as early as June, I know that many people are planning a property purchase this summer. We have seen huge numbers registering for the online international show we sponsor, Your Overseas Home Virtual on Saturday 13 March. You can register here.
If you’re one of those, you should ask yourself “will I get a better rate this summer than this morning?” If as I expect the answer on the balance of probabilities is No, do call your trader on 020 8108 5337 to discuss locking it in with a forward contract.
Then you will be able to move ahead with your plans this summer safe in the knowledge that your euro or dollar budget is secured.
