Today is the day for the Philip Hammond, with the UK Budget announcement due at 12:30pm. Where Budgets do not usually attract significant movement on the currency markets today is different because of the relevance of this Budget to the UK economy and also Brexit – both big factors driving the strength and weakness of the Pound. The UK government is also in the spotlight at present and there is great pressure on this Budget to deliver a positive reflection of the Government and position the country well to handle the economic impact of Brexit.

Sterling slipping this morning

Sterling has slipped by around 0.2% against most currencies in early morning trading notably the Euro and US Dollar. Against the Australian and New Zealand dollar we are ever so slightly higher but this is more to do with global events weakening these currencies than the Pound being stronger.

Lower UK growth predictions

Sterling could easily come under some pressure in the coming hours as the OBR (Office of Budget Responsibility) is predicted to lower growth forecasts for the UK. Whilst Hammond is predicted to announce some good news with borrowing likely to fall, this is not predicted to offset the overall longer term cost to the economy of lower growth.

Sterling could benefit from some unexpected surprise announcements or the good news that borrowing is lower. These announcements will have to be very positive and with so much to overcome I personally doubt that the Pound will come off significantly better from the Budget.

Long term enthusiasm for Brexit from Philip Hammond seems unlikely and I expect him to focus on steadying the course for a perceived rocky road ahead. Such tones from the Chancellor will do little to alter investor’s general view that until the UK position, and the outcome from Brexit become clearer, the Pound will have a long way to go to recover the form it has lost since the vote to leave the European Union last June.