The pound made further losses on Wednesday as Rishi Sunak’s budget announcement is suspected to be disappointing for those expecting an increase in government spending. The pound made the heaviest losses of all low-risk assets, losing 0.7% against the US dollar and 0.6% against the euro. The Institute for Fiscal Studies is pushing the government to admit that the desired increased spending will have to mean an increase in tax.
The market is currently less concerned by Brexit negotiations though analysts have warned that Sterling’s apparent lack of volatility will likely be tested later this year.
GBPUSD opened at 1.2988 and fell slowly in the morning, then much more sharply in the afternoon. Closing at a low of 1.2920
GBPEUR opened at 1.1940 and fell sharply across the day, closing at a low of 1.1861
The US dollar was largely unchanged on Wednesday as coronavirus worries kept the safe-haven currencies in demand. The dollar index was 0.073% higher and the S&P 500 hit its daily low on the back of concerns that the coronavirus could hit New York.
The dollar fell 0.03% against the euro but was helped by the fact that most investors believe The Federal Reserve will scale back its policy easing that might have been necessary in light of the virus spreading affecting global economies.
EURUSD opened at 1.0879 and despite some volatility, the pair closed little changed at 1.0887