There hasn’t been a lot to say about sterling lately. It has remained remarkably steady, and strong. Well worth considering fixing with a forward contract if you have a large transaction coming up overseas, and you value certainty over risk-taking.
The reason for sterling’s lack of movement lately has been somewhat thin data on the ground in the past week or so, and nothing we did not already know from interest rate setters at the Bank of England.
However, this is a Budget week.
You don’t need a very long memory to recall when a Budget had a disastrous impact on the pound. In October 2022, it led to the pound hitting its lowest against the US dollar for decades – and that was only a ‘mini-Budget’.
This time around we can probably assume that chancellor, Jeremy Hunt, will be wary of upsetting the markets with anything too drastic. However, politicians are always going to be wanting to win elections and he will be keen to hand out something in the way of tax cuts ahead of the General Election later this year (or possibly in early 2025). If nothing else, just to please his side.
So, anything could happen to the pound this week.
Other than that it’s another quiet week for data. But don’t let that lull you into a false sense of security, this is a critical week for the pound, which is still 3.5% up on the euro compared to this week last year. It looks like an excellent day to lock in that rate with a call to your account manager on 020 8108 5163.
