Budget 2021: Predicted measures from Chancellor Rishi Sunak
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Chancellor Rishi Sunak is set to announce his latest Budget today, explaining how he will provide support for the nation as it emerges from its third national lockdown in the coming months. While traders anticipate the news, the pound continues to hold its position above the 1.15 mark against the euro.
However, it is likely to see some changes as news of the Budget plans emerge.
The pound is currently trading at a rate of 1.1551 against the euro according to Bloomberg at the time of writing.
Michael Brown, currency expert at Caxton FX, spoke exclusively to Express.co.uk to share his insight into how the current exchange rate.
“Sterling continues to tread water in the mid-1.15s, with the early part of the week having brought little for investors to get their teeth into,” he explained.
“One may assume that today’s Budget could be a market mover, and there is a possibility that it will be; however, past Budgets have never been a huge event for the FX space, and with so much appearing to have been leaked in advance, the majority of announcements are probably priced in already.
“Final services PMIs are also due, though can be safely ignored.”
According to George Vessey, UK currency strategist at Western Union Business Solutions, GBP investors are “unnerved” by the approaching news from the Chancellor.
“The highlight anticipated UK Budget will be announced by Chancellor Rishi Sunak, with all eyes on how the government will support businesses and households through the pandemic whilst unveiling plans to balance public finances in the future,” he said yesterday.
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“Sterling is sliding though, dogged by the threat of new virus variants and general risk appetite waning.
“Talk of tax increases is likely unnerving GBP investors too as a shift in fiscal strategy too soon could create an unnecessary headwind for the recovery.
“Alongside the Budget, Mr Sunak is expected to publish a review of expected proposed changes to make the UK a more attractive place for entrepreneurs to take companies public – competing with the likes of New York, Amsterdam and Frankfurt.”
He continued: “Solid manufacturing expansion in Europe is helping the bloc’s recovery and is a positive sign for the expected growth rebound.
“This also puts upward pressure on inflation expectations making today’s Eurozone inflation print at 10:00am a key trading point for the Euro.
“GBP/EUR remains in the higher realms of the €1.15 zone for now.
“GBP/EUR has held firm above the €1.15 handle as a result, but as sterling is a risk-sensitive currency too and has benefited by the fast vaccine rollout in the UK, the pound’s gains could further unwind if risk aversion grips markets.
“GBP/EUR could sink back towards the €1.13 support level in this scenario.”
What does this mean for travel money?
At the moment many Britons are unable to travel under the currency lockdown restrictions which state travelling for leisure is “illegal”.
However, with the Global Travel Taskforce set to be reinstated within the coming months, there is hope ahead for holidays.
easyJet and Skyscanner have already reported a surge in bookings for the summer months after the Prime Minister suggested some international travel may go ahead from May if the Global Travel Taskforce deems it safe and possible.
In anticipation, some hopeful holidaymakers may be looking to take advantage of the current rates and swap money in advance.
James Lynn, co-CEO and co-founder of travel card Currensea, explained: “It may be tempting to take out foreign currency in anticipation of a future holiday, while the exchange rate is favourable.
“However, I would advise against this. Market movements are often more marginal in reality than they appear.
“Especially during this volatile time, it’s safer to keep hold of your money in your UK bank account than purchasing or exchanging for holiday money.”
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