GBP/USD steadies close to 1.3950 ahead of UK budget announcement on Wednesday


  • GBP/USD is currently consolidating around the 1.3950 mark amid thin trading volumes
  • The UK budget is to be revealed tomorrow and will be the main event of the day for GBP.
  • Recent reports from the FT suggest a longer than expected extension to UK Covid-19 support programmes like the furlough scheme.

GBP/USD is currently consolidating around the 1.3950 mark amid thin trading volumes with the Wednesday Asia Pacific session yet to get into full flow. Recent news that UK Finance Minister Rishi Sunak is set to extend Covid-19 support further than expected has not impacted FX markets at all but may support GBP as volumes pick up in the coming hours. As a reminder, the budget is set to be revealed tomorrow; Sunak will be delivering a speech before parliament after PMQs likely to start around 12:30GMT. GBP/USD closed Tuesday trade with modest 0.2% gains, having recovered from early European session lows of just above the 1.3850 mark to current levels around 1.3950.

Budget Expectations Update

The FT just came out with a new report suggesting that UK Finance Minister Rishi Sunak is set to extend a vast package of Covid-19 support until the end of September, which, as the articles says, Sunak hopes will nurse the UK economy back to economic health by the autumn. Note that prior to this FT article, markets had been expecting Covid-19 support (i.e. the furlough scheme aimed at keeping employees in their jobs and the £20 per week enhancement to universal credit payments) to be extended until June. Reportedly, the Sunak wants to avoid a “jobs cliff-edge” that removing the furlough scheme too soon might cause.

As a reminder, as reported by UK press over the weekend, the budget is set to contain three distinct “phases”. Phase One is mainly about ongoing Covid-19 support schemes, which are set to be extended to June (furlough, business rates relief and VAT reductions, stamp duty holiday and “bounce back loans”). Phase Two is going to be about some fiscal injection to accelerate the post-Covid-19 recovery (£5B “restart” fund for giving small business grants, a £22B national infrastructure bank and aid for first-time homebuyers). Phase Three is going to be about paying for everything and is likely to entail freezing income tax rates and a modest increase to corporation tax. UK press, citing leaked excerpts of Sunak’s speech, expects the UK Finance Minister to say that “once we are on the way to recovery, we will need to begin fixing the public finances and I want to be honest today about our plans to do that”.

GBP/USD

Overview
Today last price 1.3961
Today Daily Change 0.0039
Today Daily Change % 0.28
Today daily open 1.3922
 
Trends
Daily SMA20 1.388
Daily SMA50 1.3719
Daily SMA100 1.3465
Daily SMA200 1.3138
 
Levels
Previous Daily High 1.3999
Previous Daily Low 1.3904
Previous Weekly High 1.4243
Previous Weekly Low 1.389
Previous Monthly High 1.4243
Previous Monthly Low 1.3566
Daily Fibonacci 38.2% 1.3941
Daily Fibonacci 61.8% 1.3963
Daily Pivot Point S1 1.3884
Daily Pivot Point S2 1.3846
Daily Pivot Point S3 1.3789
Daily Pivot Point R1 1.3979
Daily Pivot Point R2 1.4037
Daily Pivot Point R3 1.4075

 

 

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