The clock is ticking to chancellor Rishi Sunak’s Budget statement to the Commons later today. With attention firmly focused on the contents of his famous red briefcase – and without any notable data in the economic calendar to trigger any activity yesterday – the pound has been treading water so far this week. This comes in stark contrast to last week when the pound to dollar rate touched the 1.42 benchmark for the first time in almost three years – the latest in a series of moves higher that saw the pound rise by over 3% against the dollar last month.
Even reports on Monday that more than 20 million people in the UK have now had their first dose of a Covid-19 vaccine was not enough to spark it into life – bucking the trend of similar vaccination milestones in recent weeks. Fresh concerns over the Brazilian variant of the virus, which has been found in both England and Scotland, have caused investors to remain cautious so far this week.
The only data slated for release from the UK economy yesterday was the Nationwide Housing Prices, which showed that house price growth rebounded in February with the average value hitting a record high of £231,068. Prices were up 6.9% from 12 months before, compared with 6.4% in January. Price growth had been expected to slow ahead of the end of the stamp duty holiday on 31 March – although there have been reports it could be extended. The holiday means the stamp duty tax has been suspended on the first £500,000 of all property sales in England and Northern Ireland since July.
Fed Governor Cites Improving Outlook While Noting Risks Remain
In her virtual speech to the Council on Foreign Relations yesterday, Federal Reserve Governor Lael Brainard said it will take “some time” to meet the central bank’s conditions for economic progress. Only then will the Fed be prepared to reduce the pace of its massive asset purchases, adding that recent bond market volatility could cause further delay. Brainard also acknowledged that the economic outlook has improved but stressed that risks remained.
Today’s Markit PMI for the UK’s dominant services sector is forecast to drop further into contraction territory for February. But it is the Budget statement from the chancellor at around 12:30 GMT that has everyone on the edge of their seat. Rishi Sunak is expected to announce a three-point plan to support people, rebuild the economy and “fix” the public finances in the wake of the pandemic.
A slew of February data is scheduled for release from the US today, including Markit Services PMI, ISM Services New Orders Index, ISM Services Employment Index, ISM Services Prices Paid, MBA Mortgage Applications and the Fed’s Beige Book. But it is the ADP Employment Change figure and the ISM Services PMI that will attract the most investor attention.
Get in touch to discuss these data releases in further detail to see how your currency exchange could be impacted.