The British Pound Sterling recorded gains on Wednesday, March 8, on the chancellor’s upgrade for 2017 growth, but then fell in response to strong US jobs data.
Sterling approached Budget Day in sombre mood, having fallen 1.2 per cent since Monday and dropping below $1.22 to its lowest level in seven weeks.
The pound was trading 0.2 per cent lower against the dollar on Wednesday at $1.2175.
That tempted currency traders to ask whether the pound was destined to plunge to $1.20, a level the pound nearly hit in mid-January amid market scepticism about Theresa May’s Brexit strategy.
Since then, the pound has been trading around the $1.25 level. But it has softened in recent days from weaker UK data around retail sales, inflation and wages, and the government’s Article 50 difficulties with the House of Lords.
Philip Hammond’s new GDP forecasts allowed the pound to pare back some of this week’s losses, only for a further decline triggered during the chancellor’s speech by the release of data showing a sharp pick-up in US private sector jobs in February.
The FT’s columnists and commentators respond to Philip Hammond’s statement
British government bonds were relatively calm, with the yield on 10-year gilts up 4 basis points to 1.23 per cent as the UK Debt Management Office said it would sell £115.1bn of gilts in 2017/18 — the lowest sum since the financial crisis, but slightly above market expectations.
