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An English £5 note and coins are seen at a restaurant in the British overseas territory of Gibraltar in this picture released October 5, 2016. — Reuters pic
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LONDON, March 23 — Sterling held at a three-week high today as investors await British finance minister Rishi Sunak’s Spring Statement later in the day and as latest data showed UK inflation hit a 30-year high.
CPI figures showed inflation at 6.2 per cent in February, up 5.5 per cent in the 12 months to February 2022, more than expected by the market.
Sunak will speak at 1230 GMT Read full story. He will add to the support he gave households only last month, since when energy prices have been propelled even higher by Russia’s invasion of Ukraine.
“The combination of above-consensus inflation, some potential hawkish comments by Bailey and a pro-growth announcement by Sunak could support the view that the BoE will have more room for monetary tightening, ultimately helping the pound today,” said FX Strategist at ING Francesco Pesole.
Investors are also watching for comments from Bank of England Governor Andrew Bailey at a summit after policymakers raised interest rates last week but signalled it would take a more cautious approach to policy tightening despite soaring inflation.
Against the euro, sterling steadied at 83.15 pence, its highest levels since March 4. The pound is down 0.2 per cent against the US dollar at US$1.32345.
More fiscal easing will be positive for the pound, according to Adam Cole, Chief Currency Strategist at RBC Capital Markets.
“Our expectation is that easing will be modest (cutting fuel duty, for example) and Sunak will resist calls for more significant measures (delaying the April NI hike, for example),” said RBC’s Cole in a note. — Reuters