Institution: UK-German fiscal prospects diverge, pound-euro exchange rate under pressure to decline

The March 11th data from Jin Shi, Monex Europe analysts said in a report that the pound’s decline against the euro partly reflects expectations of German fiscal spending, and also reflects the UK government’s plan to cut welfare spending (suppressing sentiment). They said that before the UK budget is announced on March 26, the call for welfare cuts is increasing, which may further dampen market sentiment, at least in the short term. If this is true, it means that the pound has performed poorly this month. However, the reform of the welfare system may prove to be a ‘long-term positive impact on the pound’ once the initial negative news begins to fade.