UK: Fiscal giveaways in pre-election budget could provide fresh impetus for a stronger Pound – MUFG

The Pound Sterling (GBP) has been consolidating at higher levels this month after strengthening in January. Economists at MUFG Bank analyze GBP outlook.

UK budget next key event for GBP

The next key event for the Pound in the week ahead will be the government’s upcoming budget announcement on March 6. 

The pre-election budget is expected to provide fiscal giveaways that could provide fresh impetus for a stronger Pound.

While the size of the potential fiscal giveaway is unlikely to be sufficient to significantly alter the performance of the UK economy, it could discourage the BoE from delivering an earlier rate cut in May or June.

There is scope for divergence further down the road between the BoE and other major central banks in how they continue to implement QT.