Philip Hammond, Chancellor of the Exchequer recently addressed Parliament with the highly-vaunted Spring Budget. Despite conservative party promises to tighten the economy, one of the proposals by Hammond would see an increased tax on self-employed people, adding fiscal liability to an additional 2.5 million Britons. Several other interesting points were raised in the recent Spring Budget, notably an increase in the sugar tax to fund children’s sport, and a heavy tax penalty on UK pensioners taking their money offshore. These were but a few of the measures highlighted in the most recent address to Parliament.

The GBP had a muted reaction to the Spring Budget, but remained perilously close to its 7-week lows against the greenback. By the end of the trading session, the GBP/USD pair had racked up yet another day of losses, and this is becoming a worrying trend for sterling bulls. For binary options traders, multiple successive sessions of losses have built strong trendlines for lucrative trading opportunities.

 What Can We Expect from the GBPUSD Pair this Week?

DXY Close to 52-Week High Level

For starters, the GBP/USD pair is hovering around 1.2100, and is struggling to hit the 1.2300 handle as strong demand for USD continues. This comes as no surprise, given the imminence of a rate hike on March 15, 2017. Recall that there is now a 91% probability of interest rates increasing by 25 basis points on Wednesday next week. This will raise the federal funds rate to 0.75% – 1.00% in short order. Any increase to the FFR raises demand for the USD. When that happens, currency traders will sell the GBP and buy USD. That’s precisely what is happening. The ADP report released on Wednesday, 8 March gives further impetus to rising yields on US Treasuries. This also helps the greenback to hit unprecedented levels. Consider the US dollar index (DXY) is now trading at 102.03, a smidgen below its 52-week high of 103.82. This is an extremely positive sign for dollar bulls.