Anna 
The Pound Sterling (GBP) experiences a slight decline from the pivotal resistance level of 1.2700 during Tuesday’s European session. The GBP/USD pair is under pressure, primarily influenced by a diminishing appetite for risk among investors and heightened uncertainty ahead of the United Kingdom’s Spring budget announcement by Chancellor Jeremy Hunt on Wednesday.
As the UK economy grapples with a persistent inflation outlook and worsening growth forecasts, Chancellor Hunt faces a delicate balancing act in outlining fiscal measures. The Spring budget’s scope will be closely scrutinized, with expectations that responsible and prudent tax cuts will be favored. Hunt emphasized this stance, stating, “We’ve always said we would only cut taxes in a way that’s responsible and prudent,” as reported by BBC News.
If the budget reveals limited opportunities for tax cuts, it could amplify expectations of early rate cuts by the Bank of England (BoE), potentially exerting downward pressure on the Pound Sterling.
Simultaneously, the Pound faces headwinds from a cautious market sentiment in anticipation of Federal Reserve Chair Jerome Powell’s testimony before Congress on Wednesday and a series of key economic data releases in the United States later in the week. The resulting relief for the US Dollar contributes to the GBP/USD pair’s current dynamics.
In today’s trading session, investor attention will be directed towards the final S&P Global/CIPS UK Services PMI, scheduled for release at 09:30 GMT. Additionally, the US S&P Global and ISM Services PMIs, set to be published at 14:45 GMT and 15:00 GMT, respectively, will be closely monitored for their potential impact on market sentiment.
As the GBP/USD pair navigates these influences, market participants are advised to stay vigilant for potential shifts in sentiment and adjust their strategies accordingly.
