Sterling advanced on Tuesday and recorded a two-week high against the Euro as the Pound “continued to retrace losses which followed what investors perceived as a "dovish" interest rate hike by the Bank of England on March 17”. The markets attention has since turned to UK inflation data and Rishi Sunak’s spring statement, both scheduled today. As a result of surging energy prices, UK Inflation YoY hit a fresh multi-decade high of 6.2% this morning. On a monthly basis, Inflation was 0.8%, exceeding expectations for a 0.6% rise and marking the largest monthly inflation increase between January and February since 2009.
This morning’s data will have added further pressure to Rishi Sunak as he prepares to deliver his Spring Statement later today. Mr Sunak has already said that his statement will look to build “a stronger, more secure economy” and provide “security for working families” as the government attempt to “help with the cost of living”. Sunak is set to deliver the Spring Statement today at around 12.30pm, alongside the latest Office for Budget Responsibility (OBR) forecasts, which are published twice a year.
Cable was able to make impressive advances on Tuesday “amid the improvement in demand for risk-sensitive assets after the DXY weakens as investors digested the announcement of seven interest rate hikes in 2022”. GBPUSD opened the session at 1.3138 and closed at 1.3250.
GBPEUR comfortably surpassed the 1.20 handle yesterday, closing above 1.2030. The pair started the day at 1.1962 and finished at 1.2032.
EURUSD was also able to capitalize on a weaker Dollar. EURUSD opened at 1.0983 and closed at 1.1013.
In regard to the economic calendar, at 11:00 US MBA Mortgage Applications will be released. At 12:00 Fed Chair Jerome Powell will be speaking, followed by Fed member Daly at 15:45.
