GBP

George Osbourne had some good news before the budget came
out yesterday, with the number of unemployed falling by 63,000 in the three
months to January, but the unemployment rate remains the same at 7.2%.

Average income also increased by 1.7% year on year, which is
nearly as high as inflation at 1.9% and private sector pay is equal to the
level of inflation at 1.9%

GBP

George Osbourne had some good news before the budget came
out yesterday, with the number of unemployed falling by 63,000 in the three
months to January, but the unemployment rate remains the same at 7.2%.

Average income also increased by 1.7% year on year, which is
nearly as high as inflation at 1.9% and private sector pay is equal to the
level of inflation at 1.9%

With regards to the budget, Osbourne commented that UK
growth this year is expected to be 2.7%, up from the previous estimate in
December of 2.4%. This is the biggest upward growth revision between budgets
for 30 years.

He was also of the opinion that GDP will surpass it
pre-recession peak by the end of June.

Unemployment this year will be down to 6.8% and will be down
to 6.5% the following year.

Inflation is set to remain stable at 1.9% and real wages
will start to finally climb this year, saying average earnings will rise by 2.5%
this year.

USD

The dollar gained significantly last night on the back
Federal Reserve Chairman Janet Yellens surprising comments about an interest
rate hike in the US.

The Fed’s monetary policy meeting began with the central
bank deciding to reduce its monthly bond buying programme by US$10bn, down to
US$55bn. Yellen then reaffirmed that the Fed will continue to taper quantitative
easing by US$10bn per month meaning the programme will probably come to an end
by this autumn.

The curveball in last night’s statement came when Yellen
indicated that the Fed could start to increase interest rates around 6 months
later.

Initially they had pledged to keep interest rates low until
the unemployment rate hit 6.5% but they will take into account a wide range of
information, including labour market conditions, indicators of inflation, and
financial developments at the time.

The surprising comments about interest rates caused GBPUSD
to drop by 1% and EURUSD to drop by 0.95%.

Today

The US will be in focus again this morning with initial
jobless claims and manufacturing data released from Philadelphia.

Key Announcements:

12:30pm – USD – Initial Jobless Claims: Expected to rise to
327,000

14:00pm – USD – Philadelphia Fed Manufacturing Survey (Feb):
Expected to come in higher to 4.