LONDON — The pound is falling on Wednesday morning as investors in the UK await the contents of Chancellor Philip Hammond’s first Spring Budget later in the day.
Hammond will step up to the dispatch box in Parliament at 12.30 p.m. GMT (7.30 a.m. ET) on Wednesday, March 8. It is his first budget since becoming Chancellor last July but his second major fiscal statement, following last November’s Autumn Statement.
Hammond’s budget is likely to be a low-key affair in contrast to previous budgets by his predeccessor Chancellor George Osborne, who liked to include surprises. However, Hammond’s address remains crucial in setting the economic policy agenda for the UK, and markets will be watching closely.
Sterling — which has fallen for seven out of the last eight days — has continued to drop on Wednesday morning, losing roughly 0.25% to trade at 1.2173 against the dollar early in the morning.
Here is the chart:
Sterling is likely to hover around these levels for the duration of the morning as investors wait for information, but could bounce once the Budget speech has been delivered. Kathleen Brooks of online CFD provider City Index writes in her morning email:
“We expect sterling to tread water with a bearish bias as we lead up to the Budget, after all, the contrasting fiscal stances between the UK and the US is decidedly pound negative. However, if the Chancellor manages to avoid terrifying the market with his continued push for austerity and instead focuses on a positive fiscal outlook for the UK — with borrowing down and tax take up — then the pound and Gilt yields could stage a mini recovery on the back of Hammond’s speech.”