British pound hits nine-day high against euro as spring statement considered


British pound coins are seen in front of the stock market chart displayed in this illustration taken November 9, 2021. REUTERS/Dado Ruvic/Illustration

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LONDON, March 22 (Reuters) – The pound strengthened to a nine-day high against the euro on Tuesday as it continues to retrace losses seen after policy decisions by the European Central Bank and the Bank of England over the past two weeks.

The Bank of England raised its interest rate by 25 basis points on Thursday and signaled a slower pace of tightening, but the pound has outperformed the single currency since the decision.

“Its strength, despite the BoE’s dovish rise last week, is a reminder that continental Europe faces the same, if not worse, pressure from the current energy shock,” ING said.

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Against the euro, sterling was trading up 0.3% at 83.44 pence, its highest level against the single currency since March 9.

The pound rose 0.2% against the US dollar to hit $1.3190.

Over the next few days, attention may turn to UK inflation data and UK Finance Minister Rishi Sunak’s spring statement, both due on Wednesday.

Sunak, who is preparing the budget update, said on Tuesday it was more important than ever to take a responsible approach to public finances. Read more

Meanwhile, Commerzbank says Wednesday’s inflation data could move the pound “significantly” if the CPI beats expectations again.

“If this were to be the case again tomorrow, BoE rate hike expectations could be fueled again, allowing the pound to rally a bit more against the euro,” You-Na said. Park-Heger, analyst at Commerzbank FX and EM.

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Reporting by Samuel Indyk; Editing by Saikat Chatterjee, William Maclean

Our standards: The Thomson Reuters Trust Principles.


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