Bank Station London

Spring statement under delivers

Michael Rimmer
Michael Rimmer 24 March 2022

GBP: Spring Statement has little impact on FX markets

EUR: Currently moving as a by-product

USD: Remains strong as safe-haven currency

Sterling 

CPI, a leading indicator of inflation, rose to 6.2%. This came out above market expectations, reaching a fresh multi-decade high. This propped sterling up, as it ramped up expectations for further interest rate rises this year. As expected, the spring statement had little impact on the FX markets. Rishi Sunak did not make any significant policy announcements that would realistically help in the growing cost of living crisis. Despite the rhetoric, the statement was utilised in the historic sense – as more of a policy update, with the Autumn Budget still deemed the main event. There was the 5p cut in fuel duty, and tax cut promised in two years’ time, however, Sunak remains a Chancellor that has overseen some of the largest tax rises on record.

Flash manufacturing and services PMI to be released 9.30am.

Euro 

The euro continued to move as by-product of wider market sentiment. It weakened off in response to Putin announcing that he would ask unfriendly countries to pay for Russian gas in roubles going forward, increasing prices. This morning German manufacturing and services PMIs came out from across Germany, however, this has had little impact on the FX rates.

USD 

There was little data of note from the US yesterday. The dollar remains relatively strong as a result of it being a safe haven currency at the moment, with continued concerns over oil supply shortages weighing on the market.

Today there is a plethora of data from the US, including core durable goods, manufacturing, and services PMIs. The data is unlikely to have a significant impact on rates, as has been the case lately. C
ore durable goods, unemployment claims. Flash manufacturing PMI, flash services PMI.

Market rates

Today's Interbank Rates at 09:12am against sterling movement vs yesterday.

Euro

€1.198

US dollar 

$1.316 ↓

Australian dollar 

$1.762 ↓

South African rand 

R19.44 ↓

Japanese yen 

¥160.1

Have a great day.