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Pound muted as investors await chancellor Reeves' spring statement - YAHOO FINANCE
Pound (GBPUSD=X, GBPEUR=X)
The pound held steady against the dollar in early European trading, sitting at $1.2907, as investors remained cautious ahead of the upcoming spring statement. Chancellor Rachel Reeves is set to unveil her fiscal plans on Wednesday, with attention fixed on how she will address the country’s economic challenges.
Reeves has already committed to no further tax hikes, after facing a backlash from the corporate sector over her decision to raise employers’ contributions to National Insurance (NI) from 13.8% to 15%. This suggests Reeves may have little choice but to implement significant cuts to public spending to manage the fiscal deficit.
Such cuts would probably lower consumer inflation expectations, fuelling speculation that the Bank of England (BoE) could move to reduce interest rates in the near term.
Meanwhile, the greenback strengthened, with the Dollar Index (DX-Y.NYB) rising to 104.42, its highest in more than two weeks. The dollar held on to Monday’s gains, supported by strong preliminary March data from the US S&P Global Purchasing Managers Index (PMI) and growing optimism that president Donald Trump’s tariff announcements on April 2 will be narrower in scope than initially feared.
