Gentium FX | Daily Report - 21st March 2022- Market Awaits UK Spring Budget

On Wednesday, UK consumer price inflation data will be released whilst Bank of England Governor Bailey will be speaking. In addition, Chancellor Sunak will be announcing his Spring Budget on the same day – all of which are likely to cause further volatility for the Pound. Sunak is facing calls from fellow MPs to decrease fuel duty to help with higher petrol prices. In addition, any action over living standards will be welcomed by the market due to increasing inflation. The Pound is likely to trade in a tight range until all of this is announced later in the week.

Over the weekend, several members of the European Central Bank warned about high inflation levels although they defended the central bank for a lack of action with regards to altering interest rates with a lack of wage growth being cited as a reason. Speaking this morning, ECB President Lagarde has downplayed the risk of stagflation which helped the Euro limit any losses for the time being against the Dollar.

Today, US President Biden will speak to his counterparts in the UK, France, Germany and Italy regarding the ongoing Ukraine-Russia conflict. If more pressure if put on Russia by the west to deescalate then the Dollar may see more demand for its safe-haven status. The market will also pay close attention to Federal Reserve Chairman Powell’s speech this afternoon – any changes in comments about inflation will be monitored.