Pound To Benefit From Chancellor’s Spending Boost?
Sterling could likely benefit against the Euro and Dollar if Chancellor Rishi Sunak’s £15BN ‘mini budget’ results in a boost to UK consumer confidence over the coming weeks.
Yesterday’s announcement by the Chancellors on the availability of extra spending to households struggling under the weight of the rising cost of living and economists say the measures should therefore boost economic growth.
A number of economists have already estimated UK GDP growth will be stronger to the tune of about 0.2-0.3 percentage points whilst stating the cash boost significantly lowers the risk the UK economy falls into recession.
As trading gets underway this morning, EUR/USD opens in the lower half of the 1.07-1.08 corridor whilst GBP/EUR continues to operate around the 1.1745 mark. Cable (GBP/USD) is on a slightly more optimistic route higher, changing hands up above the 1.26 threshold.
Datawise and looking ahead to today’s releases, the latest reading of US core-PCE inflation will garner close attention. The consensus is for core-PCE to ease back to 4.9% in April from 5.2%, indicating inflation may have peaked in the US. Elsewhere, US consumption and income data for April will also be of interest but are unlikely to impact the dollar.