This could be an important week for British markets. ING economists analyze the outlook for the British Pound (GBP) ahead of the Spring Budget.
UK Budget Key Risk Event for Sterling
Hopes for pre-election tax cuts are likely to face funding constraints, although we estimate the headroom has increased from £13bn to £18bn thanks to slightly lower market rates compared to the November Fall Statement.
British media have reported that Hunt will likely reduce the size of the tax relief package and that support measures will also be smaller than in November.
A moderately sized tax relief package (i.e. one that does not cause turbulence in Gilts) can probably provide some support to the GBP this week, but admittedly the spectrum of possibilities is quite wide.
Source: Fx Street
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