Pound v US dollar: Spring Statement and US inflation readings imminent

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The hammer out to US dollar exchange rate steadied this morning

Having proded the Budget to the autumn, markets are apprehensive.

Mr Hammond is expected to reveal a new, cheerful assessment of the British economy, with growth forecasts pushed up for this year and the next.

This drive take the form of updated Office for Budget Responsibility (OBR) forecasts with the Chancellor also look forward to provide some positive news on British productivity.

Mr Hammond is also assumed to announce that the Government will not need to borrow to cover lay out this year.

If this is so, it will be the first time that this has developed since the financial crisis.

The overall outlook for this statement is to some extent positive, but the pound’s upward trajectory seemed to be limited as markets put in order for the highly-anticipated US inflation data.

Markets are currently expecting the US year-on-year inflation pace to print at 2.2 per cent in February, slightly up from the previous stretch’s 2.1 per cent.

The core inflation reading, excluding volatile prizes of food and energy, is forecast to remain steady at 1.8 per cent, notwithstanding.

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Philip Hammond is set to unveil the UK’s first ever Spring Declaration today

If these expectations prove accurate then market presentiment for a rate hike this month from the US Federal Reserve drive likely reach fever pitch.

This is largely due to the record-low US unemployment standing, the addition of 313,000 jobs in February and hints from members of the US Federal Stretch out Market Committee (FOMC) that there could be room for four place hikes this year.

An accelerated rise in US inflation could zip the US dollar higher and put fresh pressure on the GBP/USD exchange rate.

However, Excellent could find some buoyancy in the form of the aforementioned fresh optimism with the UK economy.

Looking ahead, this week is a rather sparse one for UK data, with the Fountain-head Statement perhaps the most pertinent of calendar events.

Markets choice be keeping an eye on any news regarding US President Donald Trump’s tariff amounts on steel and aluminium.

However, with many hopeful that the UK could depart towards securing eventual exemption like Australia, Canada and Mexico.

Whilst President Trump has expressed pastime in a trade deal with the UK, it remains to be seen if the UK will find immunity from the tariffs waiting after it has left the EU, or if Britain will successfully shield the ability to negotiate trade deals during the transition period.

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