By Joice Alves and Tom Westbrook
LONDON/SINGAPORE, March 15 (Reuters) – The pound and euro were stabilizing ahead of the British government’s budget announcement on Wednesday and the looming European Central Bank interest rate hike on Thursday.
* The dollar also stabilized as fears of a banking crisis dissipated and investors reduced bets on a US rate cut.
* The pound fell 0.11% to $1.2146, standing at 88.24 pence against the euro. UK Finance Chancellor Jeremy Hunt is due to deliver a budget speech in Parliament around 12:30 GMT. Hunt is expected to announce how it will try to support the world’s sixth-largest economy.
* The euro hit a monthly high of $1.0760 before trading again at $1.0730, ahead of the ECB meeting.
* Markets are pricing in a 90% chance of a 50 basis point hike in eurozone rates, a bigger hike than traders are expecting from the US Federal Reserve next week.
* The dollar rose 0.16% to 134.45 yen, despite wage negotiations in Japan which saw the biggest wage increases in a quarter century, likely to put pressure on the country’s monetary policy.
* Bank stocks rebounded and bonds and interest rate futures gave back some of their huge gains after three US banks failed in days.
* These measures suggest that immediate fears of contagion within the US banking system have dissipated following the collapse of Silicon Valley Bank (SVB) last week.
* Interest rate futures now imply an 80% chance of a 25 basis point rate hike in the US. A week ago, markets were giving a similar probability of a 50 basis point hike, but earlier this week fears of the crisis prompted traders to give a 50% probability.
(Reporting by Joice Alves in London and Tom Westbrook in Singapore; Editing in Spanish by Ricardo Figueroa)