The budget situation will remain very important ahead of policy announcements next week. Relief that the UK is tackling the deficit will be offset by fears that there will be a negative impact on growth and push the economy back into recession. There will also be pressure on the Bank of England to maintain low interest rates. In absolute terms, Sterling is likely to remain a weak currency, but in relative terms it will continue to gain important protection from the very important weaknesses elsewhere notably in the Euro-zone. Sterling could edge very slightly stronger in the near term, but does not look well-placed to secure strong gains ahead of Tuesday's budget statement with heavy selling pressure on any move to the 1.50 area against the dollar and it offers little value at current levels.