The Pound remains the second best performing G10 currency on a year-to-date basis, with only the Swiss Franc outperforming. Today, Chancellor Hunt will present his first scheduled budget following his emergency budget last November. Economists at MUFG Bank expect GBP to perform better ahead.

Budget in focus

“Much of the focus will be on trying to expand the potential growth rate of the economy. The budget is expected to include capital allowances to encourage business investment. There will also be changes to the taxation of pensions that will allow higher pension pots to be built without being taxed more onerously. The current framework is being blamed for curtailing labour supply in the 50-64 age bracket.” 

“The budget is unlikely to be a market-mover (unless there are some growth-positive surprises) but today could serve as a reminder that the high and sustained level of uncertainty and pessimism linked to the UK in recent years has passed and that certainly points to the potential for better GBP performance ahead.”