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The British Pound has not shown a material reaction to the announcement of an additional £15BN fiscal stimulus by the government, leading analysts at HSBC to suggest at the very least the move has prevented the currency from falling further.

Key Sterling pairs were largely static in the wake of Chancellor of the Exchequer Rishi Sunak's spending spree, aimed at cushioning households from the blow of surging energy costs.

"The lack of GBP reaction to the government’s GBP15bn support package for households is revealing," says Daragh Maher, Head of Research, Americas, at HSBC.

"The prospect of extra help might have been viewed as GBP positive, helping to underpin spending, and allowing the BoE to concentrate on raising interest rates to bring inflation lower," he says. "Yet GBP has done little."

The Pound to Euro exchange rate actually fell in the wake of the announcement, but Pound Sterling Live observed this was more to do with a broad based rally in the Euro.

The Pound to Dollar exchange rate made marginal gains, but the Dollar was broadly flat.

Above: GBP/EUR and GBP/USD have shown little directional motivation on May 26 and May 27.

In fact, there was very little idiosyncratic move in any of the major Pound exchange rates.

Furthermore, money markets showed investors' UK interest rate expectations for a year away have actually moved a little lower than they were ahead of the announcement according to HSBC.

HSBC say structural concerns such as the bigger fiscal deficit, or the headwinds to FDI that the windfall tax might foster, could be offsetting any cyclical boost to GBP.

"It is also likely that this new fiscal impulse has merely prevented the market from having to concede that its pricing for BoE rate hikes might be too aggressive. It has enabled the status quo to be sustained for now," says Maher.

Money markets show investors anticipate approximately a further 100 basis points of hikes for 2022, which must be met if the Pound is to remain near current levels.

If this is lowered as investors realise the Bank of England is set to pause its rate hiking cycle, the Pound would come lower.

Therefore, the boost provided by the Bank could in fact simply shore up current expectations, easing the downside potential on Sterling.

"It seems GBP needs this fiscal help just to stand still," says Maher.

Pound Sterling Live reported in the wake of the Chancellor's spending announcements the Pound could yet benefit from the decision if consumer confidence perks up as a result.

GfK’s long-running Consumer Confidence Index decreased two points to -40 in May, the lowest score since records began in 1974.

This matters for the UK economy given it is driven by its consumer facing services sector.

What's good for consumer confidence is therefore good for the economy and, by extension, the Pound.

If households feel their personal situation has improved as a result of the measures announced by the government we might have witnessed the nadir for consumer confidence in May.

But the economic surveys covering any shifts in sentiment and consumer behaviour following the Chancellors announcements are still at least a month away, meaning the tide of deteriorating sentiment towards the UK and the Pound might only turn towards the end of June.