The pound fell 2.45 cents against the US dollar in Monday’s trading to close at the 1.4537 level as investors remained cautious ahead of the UK’s budget tomorrow. Alistair Darling is expected to announce one of the poorest economic outlooks for decades when he outlines his budget for 2009-2010, and he is also expected to try and explain why the UK will need to increase borrowing to unprecedented levels. The Treasury looks set to reveal that it anticipates a 3.0-3.5% slowdown in the UK economy, a stark increase from November’s prediction of 0.75-1.25%, and that borrowing will hit around £180 billion, up from a projected £118 billion in November. The Confederation of British Industry (CBI) announced yesterday that it believes that the recession will ease off in the second quarter of this year and Rightmove reported that the rate at which UK house prices are falling had eased off. However, these announcements did little to pare sterling’s losses against a broadly stronger dollar.
In today’s trading the pound has managed to hold its ground somewhat against the US dollar, having come off an earlier low of 1.4471. Today sees the announcement of Consumer Price Index and Retail Price Index data in the UK and the ABC/Washington Post Consumer Confidence survey in the US.
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