Sterling fell by 0.8% against the US dollar as Chancellor George Osborne lowered the estimate for UK economic growth to 1.7% this year from a previous forecast of 2.1%. Inflation is also expected to remain between 4% and 5% which raises the possibility that we could be looking at a period of “stagflation”. Heading into yesterday, sterling had been buoyed by higher than expected inflation and an anticipation of earlier than expected interest rates. However, the Bank of England minutes showed no changes to last month’s voting and the Budget delivered a downgraded growth forecast – both of which contributed to sterling’s drop. Out today we have retail sales figures that could see some volatility, so call in now for a live price.
In the euro zone, the euro held firm as expectations for an interest rate hike next month rebounded and this contrasted sharply with the Bank of England’s stance and also poor US data. The euro’s gains were limited by concerns over Portugal, where there were worries that a political crisis could see the country seeking emergency help from the European Union. The European Summit kicks off today, so keep an eye out for any news that could see significant movements.
In the USA, housing figures disappointed yet again with new home sales data undershooting the estimate by 40,000 and hit a record low for February. Crude oil was trading at $116 a barrel as tensions in the Middle East and North Africa kept investors cautious. Call in now for a live exchange rate.
Elsewhere, the New Zealand dollar performed well overnight as 4th quarter growth beat forecasts and helped calm concerns over the onset of a recession.
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