The British pound stabilizes at a one-month peak as Powell weakens the dollar

The pound saw a slight increase on Thursday following UK finance minister Jeremy Hunt's spring budget announcement, which included tax cuts but lacked surprises for the market.

The focus shifted towards the direction of the U.S. dollar. Sterling rose by 0.2% to $1.276, its highest level in about a month, and also made gains against the euro. Hunt's budget reduced national insurance contributions but maintained a cautious fiscal stance, alleviating concerns about Britain's debt burden and supporting consumer stocks.

However, the pound's strength was primarily attributed to a decline in the dollar after Federal Reserve Chair Jerome Powell hinted at potential rate cuts later in the year. Analysts noted that Powell's comments suggested the Fed's comfort with lower rates amidst decreasing inflation.

Looking ahead, upcoming UK data releases, including GDP and wage inflation, will be closely watched, particularly in relation to the Bank of England's stance. Futures markets indicate expectations of unchanged UK rates until at least August, contrasting with anticipated rate adjustments by the European Central Bank and the Fed.