020 7898 0500In his spring statement, Chancellor Phillip Hammond predicted a brighter future for the UK. The lower borrowing projections, revised growth forecasts and the smallest budget deficit since 2002, all did well to paint a better picture around the UK economy. In his statement, the chancellor confirmed the Office for Budget Responsibility have upgraded their forecast for GDP growth to 1.5% in 2018, up from November’s forecast of 1.4%. Although there were no new policy announcements on tax and spending, the rosier outlook and favourable fiscal developments led some to speculate an end in sight to the austerity measures that have been in effect since the 2008 financial crises. With this speculation came a favourable mood around the pound as the market reacted positively to the Chancellors upbeat view of the UK economy.
The pound was also buoyed yesterday by the remarks of Robin Walker who acts as Parliamentary Under Secretary of State at the Department for Exiting the European Union. In a speech to the institute of directors, he indicated that he believes a Brexit transition deal will be struck this month and was quoted as saying that “we recognise how important it is to secure the deal on the implementation period as soon as possible. I want to stress that we are very close to a deal at this time.” Understandably, the pound reacted well to this comment and this, along with the spring statement, caused the pound to gain across most of the major currencies yesterday.
Looking forward, today is very quiet on the data front and so we look to see whether the momentum in the pound will continue into today or if any official comments are published to taper Walker’s positivity.
