The headlines were dominated by the UK budget, where the chancellor sought to strike a balance between fiscal responsibility and the impending election. Reactions varied, but monetary policy forecasts have seen little change. The market anticipates an initial rate cut in August, with rates potentially reaching 4.50% by year-end.

Meanwhile, in the US, Federal Reserve Chair Powell reiterated the Fed's cautious approach, emphasizing that there's no rush to cut rates given the strong economy. Confidence in inflation returning to the 2% target on a sustainable basis is deemed essential. Although the market leans towards an initial rate cut in June, it anticipates a cumulative 0.85% cut throughout the year.

Friday’s release of the crucial US payrolls numbers is expected to significantly influence monetary policy decisions, likely leading to increased market volatility.

As anticipated, the European Central Bank maintained its policy, but downgraded short-term growth and inflation forecasts. A bold rate-cutting cycle is expected in June, with up to 1% of cuts already factored into the market.

On the currency exchanges, GBP/USD is trading at its year-to-date high, influenced by weaker US data and the interest rate outlook. Simultaneously, GBP/EUR remains close to the upper limit of its well-established range.

Key data releases this week include updates on the UK jobs market and US inflation.