Sterling awaits UK Budget, dollar finds footing as SVB fears calm down
Sterling and euro steadied ahead of British government’s budget announcement later on Wednesday and the European Central Bank’s looming interest rate hike on Thursday.
The dollar was also stabilising as fear of a banking crisis ebbed and investors dialled back bets on U.S. rate cuts.
Sterling edged 0.11% lower at $1.2146 against the dollar and flattened at 88.24 against the euro with finance minister Jeremy Hunt due to make a budget speech to parliament at around 1230 GMT. Hunt is expected to announce how he will try to prop up the world’s sixth-biggest economy.
“We doubt anything in the Budget will be sterling negative – after all taxation levels are near the limit – but equally we do not see it as especially sterling positive either,” said Chris Turner, global head of markets at ING.
The euro touched a month high $1.0760 before drifting back to flat at $1.0730, ahead of the ECB meeting.
Markets are pricing in a 90% chance of a 50 basis point hike in euro zone rates, a bigger increase than traders expect from the U.S. Federal Reserve next week.
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