After a week of substantial gains Sterling yesterday suffered its sharpest decline of the year – dropping by over 1% against the Euro, and over 0.8% against the Dollar. Jerome Powell’s speech on Wednesday evening did enough to keep Cable above the 1.41 barrier going into Thursday but as the day progressed, the Pound experienced a heavy sell-off and depreciated rather dramatically. Given that in the proceeding days will be quiet in terms of economic data, investors will be looking ahead to Rishi Sunak’s Budget on March 3rd for more direction.
GBPUSD started Thursday on the back foot, struggling at 1.4137 after a sharp decline. As the North American session got under way things went from bad to worse for cable, shedding even more of the gains it had made in recent weeks. The pair finally closed just above the 1.41 mark at 1.4102 but has since then depreciated down to the 1.39 range.
GBPEUR also experienced a lethargic start to yesterday’s session. The pair opened at 1.1593 and closed at 1.1532. The pair has been unable to sustain itself going into Friday, and currently trades around the 1.1490 level.
EURUSD in contrast to the two former pairs, was able to gain some decent upside on Thursday. Opening at 1.2194 the pair quickly gained some momentum and broke past 1.22 and closed the day at 1.2228. Despite a positive session in Europe, EURUSD has come under downside pressure and currently sits around the 1.2140 mark
In regard to the Chancellor of the Exchequer’s latest Budget, reports indicate Sunak could “mix tax hikes on big business with another short-term COVID support package to see firms through to summer. The Chancellor is looking at spending £30billion on extending the furlough scheme, VAT cut for retail and hospitality, stamp duty exemption and business rates holiday until June”. A Treasury source was quoted in the tabloids earlier that “the budget will give people the reassurance they need in the immediate term and he will be honest with the British people about how we are going to recover beyond this crisis”. The source reaffirmed that the “Chancellor has always put protecting jobs and livelihoods at the heart of everything he has done and that will not change”.