The Pound Sterling remains upbeat amid hopes that the Fed will cut interest rates before the Bank of England.
The UK budget for 2024 was broadly in line with market expectations.
Easing US labor market conditions have built downward pressure on the US Dollar.
The Pound Sterling (GBP) exhibits strength against the US Dollar in Thursday’s London session as investors hope that the Bank of England (BoE) will start reducing interest rates after the Federal Reserve (Fed). Market expectations for a rate cut by the BoE and the Fed are for June and August policy meetings, respectively.
Apart from expectations that the BoE will choose to cut interest rates later than other central banks of the Group of Seven economies (G-7), the announcement of the scope of fiscal stimulus in the United Kingdom’s budget for 2024 has also strengthened the Pound Sterling.
The Chancellor of the Exchequer, Jeremy Hunt, said on Wednesday that the UK administration intends to reduce public sector net debt and budgetary deficit while supporting economic growth.
Going forward, the UK’s Average Earnings data for the three months ending in January, which will be published early next week, will provide a fresh outlook on inflation. Wage growth has remained at a level that almost doubles what is required to be consistent for the return of inflation to 2%. Strong wage growth momentum would dampen market expectations for rate cuts, which could benefit the Pound Sterling.
Edited 09 Mar 2024, 15:33
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