Foreign exchange markets anticipate Budget

Sterling's performance on the foreign exchange markets is likely to be affected by the Budget for 2010.

Chancellor Alistair Darling will deliver the Budget at midday today (March 24th).

So far sterling has remained relatively steady against the dollar, trading at $1.495 at 11:00 GMT.

However, the pound has made gains against the euro to reach €1.19.

Although government borrowing has recently been revised down, the Budget is still expected to give traders the jitters in highlighting the British economy's weaknesses.

Geraldine Concagh, economist at AIB Group Treasury in Dublin, told Reuters: "The Budget will be the key event for sterling today.
"Sterling has been weaker against the dollar after the weaker-than-expected inflation numbers and the outlook for sterling remains the same - with interest rates set to remain low for some time and uncertainty ahead of the election."
The latest election opinion polls suggested that a hung parliament is still the most likely result for the forthcoming General Election in May, again adding to concerns that sterling will fall.

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Posted by Chris Barber