The GBPEUR was lower on Thursday as sterling pulls back from strong gains ahead of the upcoming budget from Rishi Sunak. Pound traders pushed the pair to almost 1.1700 yesterday as the march towards the April 2020 highs continues.
Some caution is now showing up and the pair may consolidate before the budget with no major economic data in the pipeline.
GBPEUR has support at 1.1500 and resistance at the 1.2000 level, which was the high for the pair in April 2020. The former price is more likely to be seen before the budget on the 3rd march.
Ex-Chancellor Urges ‘Home Truths’
The former UK Chancellor Lord Philip Hammond has urged the government to give the country some “difficult home truths” on the economy, while also criticizing “extravagant” spending plans.
Hammond told the BBC’s Laura Kuenssberg that ministers had “made very extravagant commitments to the British people before the virus hit.”
He added: “Not all of those commitments can now sensibly be delivered on and that’s going to be a big challenge for a government that regards its short-term popularity as very, very important.”
Mr Sunak’s budget will undoubtedly deliver some home truths as corporate taxes are expected to rise by 6%, while pensions relief promised in the manifesto is in the firing line. Hammond’s comments echo those of two other Tory finance chiefs last week with Ken Clarke and Norman Lamont urging Sunak to walk back manifesto promises.
UK Seeks Talks With US Over Tariffs
The British trade minister Liz Truss said yesterday that her team would urgently seek a meeting with their US counterparts to discuss the removal of tariffs.
Britain was subject to a round of tariffs on exports such as Scotch whisky, while the UK was still tied to the EU. The move was part of a dispute over aircraft subsidies, but the situation no longer applies to the UK.
Elsewhere in trade, the former EU chief negotiator Michel Barnier hinted that Britain’s access to the EU energy market depends on access to UK fishing waters. In Article 27 of the Brexit trade deal Energy title, both sides have agreed there will be no tariffs on the exportation of electricity or gas. His comments came after recent turbulence over access to fishing after an EU ban on UK shellfish. The disagreement threatened to escalate despite being only 6 weeks since the deal was agreed.
This week also saw the UK extending their deadline for the EU to approve the trade deal and blasted their inefficiency.
“It is disappointing the EU has not completed its internal processes in the agreed timeframe, given the uncertainty it creates for businesses and individually on both sides,” the UK government said.
GBPEUR is 0.35% lower on the day at 1.1574 and the pair may drift lower into the weekend as traders shift their focus to the budget.
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