The pound was broadly steady against the dollar and the euro early on Wednesday, as investors and traders geared up for Chancellor Philip Hammond’s latest Budget statement later in the day.
Sterling was recently changing hands at around €1.1263 against the euro and $1.325 against the dollar, little changed on the day. It was marginally lower against Japan’s yen and the Swiss franc. Both are currencies that tend to be favoured by investors during times of market uncertainty.
Lukman Otunuga, research analyst at FXTM, said that while Mr Hammond’s speech is expected to largely revolve around issues like managing the housing crisis, investors are likely to pay particular attention to the Office for Budget Responsibility’s updated growth forecasts for the UK economy.
“If the overall tone of the Budget statement is gloomy and Brexit concerns making an appearance, sterling is likely to find itself under renewed selling pressure,” he said.
The pound has endured a turbulent ride since June 2016’s Brexit vote. Even though it’s stabilised somewhat in recent months, it remains around 10 per cent lower against the dollar since the referendum and around 13 per cent lower against the euro.
In the longer term, analysts are cautious about forecasting a sustainable recovery for the currency – especially considering the stubborn uncertainty over what Brexit will eventually look like.
London’s FTSE 100 stock index of the country’s biggest listed shares kicked off Wednesday’s trading session slightly higher, to hover around 7,420 points.
