Pound Climbs Ahead Of U.K. Budget Announcement
The pound appreciated against its major counterparts in the European session on Wednesday, as the UK government is set to unveil its budget, which includes the extension of the furlough scheme to help protect jobs amid the coronavirus crisis.
U.K. finance minister Rishi Sunak is expected to extend the furlough scheme until the end of September and outline a three-point plan to help people through the coming months.
Under the scheme, businesses will have to start contributions to their staff who do not work, paying 10% in July and 20% in August.
European stocks rose as concerns over valuations reduced and hopes revived of a stimulus-fueled recovery from the pandemic.
Survey results from IHS Markit and Chartered Institute of Procurement & Supply showed that the UK service sector output declined only moderately in February after a sharp downturn at the start of 2021, as the third national lockdown has caused limited damage to the economy.
The final services Purchasing Managers’ Index rose to 49.5 in February from an eight-month low of 39.5 in January. The flash score was 49.7.
The pound strengthened to 6-day highs of 149.70 against the yen and 1.2821 against the franc, off its early lows of 148.74 and 1.2749, respectively. The next likely resistance for the pound is seen around 153.00 against the yen and 1.30 against the franc.
The pound spiked up to a 5-day high of 1.4007 against the greenback and a 2-day high of 0.8635 against the euro, recovering from its previous low of 1.3937 and a 2-day low of 0.8668, respectively. The pound is seen finding resistance around 1.41 against the greenback and 0.84 against the euro.
Looking ahead, U.K. Chancellor Rishi Sunak will deliver the 2021 budget at 7:30 am ET.
U.S. ADP private payrolls data for February is scheduled for release at 8:15 am ET.
Canada building permits for January and ISM non-manufacturing PMI for February will be published in the New York session.