The Day of Britain’s Budget - 21.3.2012

British Pound The UK Office for National Statistics reported today the UK’s budget deficit was almost doubled in February, jumping to 15.2 billion pounds from 8.9 billion pounds in the same month last year. The Bank of England Meeting Minutes indicated today that all members of the Monetary Policy Committee voted to hold the interest rate at 0.50 per cent. Later today the British Chancellor of the Exchequer George Osborne delivered his 2012-13 budget plan. Osborne appeared convinced about his budget plan, saying that warnings from Fitch Ratings and Moody’s concerning possible Britain's downgrade and a loss of its top credit rating, reinforce the need to stick to his plan. Osborne’s major points for the 2012-13 budget plan are a further cut of 1 per cent on the corporate tax implemented from the 1st of April, corporation tax will be 24 per cent from the next month and 22 per cent by 2014. Reduction of the corporate tax is targeted to boost business and private investments, funding that with levies on banks and with a new 7 per cent stamp on wealthy property sellers. Furthermore, Osborne said that deficit will reach the forecast of 7.6 per cent of GDP for 2012, inflation forecast is 2.8 per cent for 2012 and 1.9 per cent for 2013. Lastly, the economic growth is expected to grow at a 0.8 per cent pace in 2012 and at a 2 per cent pace in 2013. The FTSE 100 index was trading modestly higher by 4.51 points at the 5,895.92 level, while the British Pound against the greenback was frozen at the 1.5835 level during the announcement of the budget. US Dollar The US dollar was trading stronger against a basket of currencies on Wednesday the 21st of March. The Australian dollar versus the greenback was on a slippery slope today, like in the yesterday’s trading session, falling further and breaking the support level at 1.0456, it was lastly seen at the 1.0444 level. Looking at the hourly chart the aussie is trading below the MA(20) and MA (10) indicating a bearish attitude. The Gold is still trading in a range formation since the previous week, between the 1665.02 upper band and the 1638.91 lower band, it was lastly seen at the 1659.98 level. Against the swiss franc the greenback bounced today and created a resistance at the 0.9126 level, while the 0.9076 possible support level is expected to hold any dip down. Against the Japanese Yen the greenback soared to 11-month high at the 84.10 resistance level today and then pulled back, trading below the 83.85 level. Euro The Euro against the greenback found resistance at 1.3285 and dropped on investors' short-covering, finding support at 1.3218 for the time being. German 10-year bund yields reached the highest level since December at 2.07 per cent, after Greek Prime Minister Lucas Papademos passed parliamentary approval for a 130 billion-euro bailout.