Chancellor Rishi Sunak announced his latest Budget yesterday, explaining how the Government will provide support for people as the country’s third national lockdown eases in the upcoming months. News of his Budget did nothing to the pound, as it continues to hold position above the 1.15 mark against the euro.
“Today’s calendar is unlikely to provide that, given the rather barren nature of European-specific events, meaning another rangebound day could lie ahead for the cross,” he added.
Mr Brown yesterday predicted that Rishi Sunak’s news may not change the euro-sterling exchange rate.
He said: “One may assume that today’s Budget could be a market mover, and there is a possibility that it will be; however, past Budgets have never been a huge event for the FX space, and with so much appearing to have been leaked in advance, the majority of announcements are probably priced in already.”
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George Vessey, UK currency strategist at Western Union Business Solutions, also shared his insight after Mr Sunak’s Budget news, saying: “As expected, this was an expansive budget designed to support the UK economy as it prepares for a re-opening from lockdown.
“The Budget offered little in terms of big surprises and therefore had low material impact on the pound. However, in terms of business and market sentiment, the overall tone of the Budget was optimistic. The upgraded OBR growth forecasts for next year are quite striking – over 7% growth would be the biggest in over 80 years. The unemployment rate peak was lowered, too – again a positive update which should add to the constructive outlook for the UK economy (and thus for GBP) during the next quarter and throughout 2021.”
Mr Vessey added: “The continued support for businesses and households, largely via the extension of current support measures, is integral for the health of the economic recovery if it is to mirror the successful vaccination rollout and trigger and strong rebound in output. A premature withdrawal of fiscal support or surprisingly high tax hikes would have been GBP negative, but for now the UK economy and Sterling’s outlook appears promising.”
“Jobs protection was the government’s main strategy and the furlough extension until September was welcomed. The unemployment rate is forecast to peak at 6.5%, nearly half that of previous forecasts. This year’s growth forecast was revised lower, but the 2022 forecast jumped to 7.3%, which would be the biggest rebound in output since the 1940s.”
The currency strategist added: “The pacey vaccine rollout in the UK, coupled with continued fiscal support, is boosting confidence in the economic outlook and is supportive for sterling.
“GBP/USD has slipped south of $ 1.40 this week, but the uptrend remains intact and could resume if the bond market cools.”
easyJet and Skyscanner have already reported a surge in bookings for the summer months after the Prime Minister suggested some international travel may go ahead from May if the Global Travel Taskforce deems it safe and possible.
In anticipation, some hopeful holidaymakers may be looking to take advantage of the current rates and swap money in advance.
However, James Lynn, co-CEO and co-founder of travel card Currensea, advised against this, saying: “Market movements are often more marginal in reality than they appear. Especially during this volatile time, it’s safer to keep hold of your money in your UK bank account than purchasing or exchanging for holiday money.”