High expectations for today’s Spring Budget amid cost of living crisis


The pound gained ground against a number of G10 currencies yesterday ahead of the publication of Chancellor Rishi Sunak’s Spring Budget.

Despite February’s steep increase in borrowing, data released yesterday showed the UK government borrowed £21.2 billion less than expected over the current financial year. Many MP’s, conservative and opposition, have requested that Rishi Sunak postpones the planned National Insurance hike. Sunak is also expected to announce a cut to fuel duty, aiming to stifle the record-high fuel prices and alleviate some pressure from the UK’s cost of living crisis. Sunak has already stated the Spring Budget should showcase a responsible approach to the UK’s finances and not burden future generations with further debt.

Looking ahead, Sterling will remain sensitive to developments in Ukraine, with the currency potentially strengthening if investors remain optimistic over the chances of a negotiated end to the conflict.

On the data front, the UK’s Consumer Price Index for February may buoy Sterling. Inflation is now at 6.2%, the highest in three decades. This may help to revive bets on another Bank of England rate hike. The publication of UK’s Spring Budget may also support GBP exchange rates today.


Sterling performed particularly well against the US dollar yesterday in response to improved risk appetite. Positive reports regarding the Ukraine crisis is driving investors towards riskier assets and weighing on the safe-haven currency. Volodymyr Zelenskiy has stated he would be willing to hold peace talks with Vladimir Putin, aiming to bring the war to a close through diplomacy.

Despite all of that, the improvement in risk appetite is being tempered by potential US-China tensions. Speaking last week US President Joe Biden warned that China will suffer the consequences should they opt to support Russia during its ‘Special Military Operation’ of Ukraine.

Key announcements

07:00 – GBP – UK CPI data
12:00 – GBP – UK Spring Budget
12:00 – USD – Fed Chair Jerome Powell speaks