As the afternoon unfolded, USD took a dip, influenced by a significant drop in US consumer confidence, which hit its lowest point in four years amid ongoing worries about tariff impacts.
The US dollar index is currently 5% lower than the start of the year, GBPUSD 3.33% higher and EURUSD 4.80% higher over that same period.
GBPEUR continued to climb back up to the highs of the 5th March, with markets continuing to reduce the number of rate cuts expected by the Bank of England (BoE) this year.
*Daily move - against G10 rates at 7:30am, 26.03.25
** Indicative rates - interbank rates at 7:30am, 26.03.25
UK CPI came in at 2.8% in February vs an expected 3%, seeing markets increase the odds of another rate cut in May to 80%.
As a result, GBP is lower to start the day ahead of this afternoon's Spring Statement. However, we feel this is likely to be a non-event for the FX space, given much of the announcements are already known.
The Office for Budget Responsibility (OBR) is expected to downgrade the growth outlook for this year as well. In general, the pound has been on an impressive run this quarter with the index rising 3.7% since January. As we approach Q2, some analysts are suggesting that the pound might be overvalued.
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