FX: GBP weak ahead of budget & US rate Decision

GBP continued to trade weaker against its peers overnight, reaching 1.4100 vs USD and nearing 1.2710 vs €. This is ahead of todays ‘Budget’ which is expected to show further austerity measures are on the way for the UK – all of this with the backdrop and uncertainty of the ‘Brexit’ (a word which has now gone WAAAYYY beyond annoying).

USD strengthened against many of its peers overnight, DESPITE yesterday’s weak Retail Sales numbers from the US, which should give the market no incentive to buy the USD. The last month’s figures for sales were also revised lower, suggesting the consumer sector of the US is  not as resilient as expected.

The USD boost is ahead of this evening’s Fed meeting in the USA, where the market will know the decision, and also the appetite for another rate hike in 2016. The odds of a US hike in June currently stand at 50%, having dipped last month (to just 5%) on fears of a continued fall in Chinese / global growth. EUR/USD remains pegged around the 1.1100 area nonetheless, ready to move sharply on any indicators this evening.

In Asia, stocks retreated and the JPY fell, after the central bank indicated rates can be set a more negative levels

In Scandinavia, SEK continues its medium-term decline, having fallen from 9.4600 vs EUR in mid-Feb to 9.2500 this morning. This is a specific weakening of the currency by the SEK central bank that I have mentioned before, and can be seen as EUR/DKK is unaffected, at 4.4580,  and EUR/NOK only slightly lower – moving from 9.6280 in Feb to 9.5000 this morning.

Mid-rates this morning:

EUR/USD 1.1100

GBP/EUR 1.2710

GBP/USD 1.4110

USD/CHF 0.9900

EUR/CHF 0.9000

EUR/JPY  1.2590

EUR/AUD 1.4850

GBP/AUD 1.8920

GBP/NZD 2.1350

USD/RUB 71.10