The Pound Sterling could see a decisive break after a two-month consolidation depending on the outcome of the UK Spring Budget announcement.
Measures outlined in the UK Budget could significantly impact the inflation outlook.
The US Dollar will be guided by US private payrolls and Fed Powell’s testimony.
The Pound Sterling (GBP) strengthens slightly against the US Dollar in Wednesday’s European session ahead of the United Kingdom’s 2024 budget statement by the Chancellor of the Exchequer Jeremy Hunt. Investors will keenly watch the scope of fiscal stimulus as it could drastically impact the outlook on inflation and the interest rate outlook by the Bank of England (BoE).
Jeremy Hunt, who will present the budget from 12:30 GMT, needs to make a balancing act between measures to keep inflation at bay and cheering the public through tax cuts, with general elections expected later this year.
The Times reported that Jeremy Hunt is expected to announce a two-percentage-point cut to National Insurance Contributions (NICs), which should save the average earner around 450 pounds this year. Combined with last year’s cut, total savings for workers would be 900 pounds.
In the United States, investors will focus on the ADP Employment Change for February and Federal Reserve (Fed) Chair Jerome Powell’s testimony before Congress at 13:15 and 15:00 GMT, respectively. Powell’s guidance on the interest rate outlook could influence market expectations for Fed rate cuts as markets currently price in the first one in June.
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