Pound Sterling (GBP) on Stronger Form Today despite George Osborne Budget Statement Fears

Modified: Friday, 18 March 2016 16:52 BST - Written by John Cameron

STORY LINK Pound Sterling (GBP) on Stronger Form Today despite George Osborne Budget Statement Fears

The Pound has fared well today, despite the recent Bank of England (BoE) quarterly bulletin predicting the Pound's value to fall along with Chinese growth.

Today has brought great gains for the Pound, which has triumphed against its rivals due to the run-of-the-mill Bank of England (BoE) minutes for their March meeting not raising any short-term concerns.

The Pound Sterling (currency : GBP) put in a tame performance in the global currency market yesterday, sending the Pound euro exchange rate back into the 1.2700s, having traded up to close to the 1.3000 GBP EUR threshold during early trading this week.

George Osborne Budget Speech Keeps Pound Sterling (GBP) Investors on Edge

The generalised unwillingness of investors to hold Sterling-denominated assets on the day was, at least in part, driven by concerns regarding this afternoon’s Budget Statement from UK Chancellor of the Exchequer George Osborne. The British Finance Minister asserted at the weekend that he was planning spending cuts equivalent to 50p in every £100 of government spending in an effort to fulfil his previous promise to eradicate the UK’s deficit by 2020. The EY Item Club warned on Monday that such a move by Osborne could ‘make a weak economic situation weaker’. It also seems that the likelihood of Osborne achieving his much-vaunted goal of returning the UK economy to a state of surplus is increasingly slim, barring substantial policy alterations. The markets await this afternoon’s statement from the Chancellor with some trepidation.

Falling Oil Prices Heap Downward Pressure on Canadian Dollar (CAD) and Norwegian Krone (NOK)

Elsewhere, global oil prices took a pronounced step back yesterday from the near term highs which they struck earlier in the week. The price of a barrel of Crude Oil slumped to $38 as one-time Pariah State Iran announced that it will not enter into talks to curb global oil output until such time that its own oil production levels break through 4 million barrels a day. The latest data available shows that Iranian output stands a long way off this threshold at 3.1m barrels per day. The renewed downshift for oil heaped pressure on the Canadian Dollar (currency : CAD) and the Norwegian Krone (currency : NOK).

Federal Reserve could Provoke US Dollar (USD) Risk with Policy Statement Today

The main risk event today comes in the USA in the form of the latest US Federal Reserve monetary policy announcement. Another interest rate hike from the Fed is considered highly improbable, but the tone of the rhetoric contained in the accompanying statement is forecast to alter the relative value of the US Dollar (currency : USD) in the markets.Should the Fed revise their projected pace of monetary tightening the US Dollar is unlikely to take much comfort from the announcement.

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TAGS: Pound Sterling Forecasts