Safe haven US dollar supported by banking fears
Daily Currency Update
Banking fears from the US to Europe following the contagion from the implosion of Silicon Valley Bank spread across the Atlantic to Swiss bank Credit Suisse prompting widespread dumping of risk assets, which saw investors turn to the safe haven US dollar.The focus has also turned to how central banks will navigate their paths on future rate hikes, with policymakers left in a bind on how much further they should raise rates to stem inflation without triggering a financial sector shakeout.
The European Central Bank (ECB) meets later on today and is due to announce its interest rate decision following the meeting. Ahead of that, investors have quickly moved to scale back their bets on a 50-basis-point rate hike, as the rout in Credit Suisse shares fanned concerns about the health of Europe's banks.
Key Movers
The pound remains lower against the US dollar while rising against a weaker euro, showing little reaction after UK Treasury chief Jeremy Hunt refrained from delivering any major surprises in his spring budget. Hunt confirmed an extension to its energy price cap and extra childcare support while fuel duty will remain frozen and corporation tax will increase from 19% to 25%, as planned.The pound picked up slightly against the euro shortly after Jeremy Hunt delivered the budget, in which he said Britain's official forecaster expected the economy to avoid recession this year.
Expected Ranges
- GBP/USD: 1.2035 - 1.2095 ▲
- GBP/EUR: 1.1335 - 1.1385 ▲
- EUR/USD: 1.0585 - 1.0755 ▲