UK jobs report and Budget to determine GBP direction today

Posted On 16 Mar 2016

Brexit concerns are back to the fore, placing the British pound under pressure, as it lost one percent of its value against the dollar on Tuesday.

The latest poll published in the Daily Telegraph on Tuesday showed that the “leave” campaign was in the lead by two percentage points ahead of the campaign for staying in the EU, with a total of 49 percent.

The news pushed the pound lower and further from its one-month high of $1.4437 hit on Friday. GBP/USD fell one percent on Tuesday to $1.4155. Meanwhile, EUR/GBP bounced 0.8 percent at 78.22 pence.

Sterling is expected to struggle in the build up to the referendum on June 23.

In the meantime, the near term risk to the pound will be today’s UK jobs report. The unemployment rate is expected to remain at 5.1%. Wage data will be closely watched for signs of further disappointment, and signs that low inflation is feeding through to weak annual pay reviews. Chancellor George Osborne announces his next budget as well.

Then on Thursday, the Bank of England policy meeting will be in focus. It is expected to keep monetary policy on hold. Low inflation and subdued economic growth in the UK and globally are all areas of concern for BoE policymakers.

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