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Sunak extends support measures

Sunak extends support measures


UK Services Sector Purchasing Managers Index, a survey of private companies’ sales, employment, inventories, and prices, was revised slightly lower to 49.5 from 49.7. A number below 50 indicates contraction although the business sentiment produced the strongest result since December 2006 and the rate of job losses slowed. Global market moves dictated Sterling ahead of the budget announcement.

Chancellor Rishi Sunak played to the crowd by extending existing support measures (furlough and self-employed support) until the end of September and maintaining sales-tax cuts and business rates. Corporation tax rises from 19% to 25% from April 2023, but the Chancellor unveiled measures to boost investment. The Office for Budget Responsibility forecasted the UK economy will recover the pre-covid output level by mid-2022 compared, 6 months sooner than previously forecasted. Sterling edged higher after the announcement as markets also monitored global risk conditions closely.

The markets have priced in a 0.1% rise interest rates by September 2022, which gave Sterling some support but not an actual lift as usually increments of 0.5% are used. Bank of England chief economist Andy Haldane stated that he wants households to spend savings and would expect a robust economic bounce-back after lockdown ends. The Pound opens just above 1.3950 to the Dollar and the Euro near 1.1575.



US ADP employment data recorded an increase in private-sector payrolls of 117,000 for February and below consensus forecasts of 175,000, although the January increase was revised higher to 195,000 from 174,000.

The US PMI services-sector index was revised higher to 59.8 from the flash reading of 58.9.The ISM services index, however, declined to 55.3 for February from 58.7 previously and below consensus forecasts of 58.7. There was a sharp slowdown in new orders growth with production growth also slowing while the rate of employment growth was also weaker. The rate of price increases accelerated significantly on the month, reinforcing market reservations over the risk of higher inflation.The dollar was unable to hold the best levels and weakened as markets monitored bond yields. 

The Federal Reserve (Fed) Beige Book stated that economic activity expanded modestly and that there were mixed developments in employment and prices. 

Comments from Fed Chair Powell will be watched very closely later in the day with the bond-market reaction crucial for the US dollar moves.



The Euro remains on the backfoot around the 1.2050 mark as the US dollar continues its slight rise alongside Treasury yields. Concerns about the pace of the yield surge has dent the risk appetite and pushed buying into safe haven pairs. The focus for the single currency will now turn to the Eurozone retail sales data. 

Germany is set to ease some restrictions on Monday but extend most measures throughout late March. European countries are loosening their limits on using the AstraZeneca vaccine after an initial low take up. The US has already inoculated around 16% of its population while European countries are far from reaching double-digits. 


Data to watch

All Day – All Currencies – OPEC-JMMC Meetings 

12:05 – USD – Fed Chair Powell Speaks

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