Sterling rallies as the UK budget eases fiscal concerns
Disclaimer: THIS MATERIAL IS NOT INVESTMENT RESEARCH AS DEFINED BY THE FINANCIAL SERVICES AUTHORITY
The budget report was widely accepted in a positive manner, Sterling has been rallying since the announcement. The bond markets have also been pushing up and rating agencies gave the report a warm welcome.
Moody’s Investor Services said the UK budget announced yesterday is “supportive” of the country’s AAA credit rating. Market participants are beginning to feel confident the government is taking rapid steps to tackle the UK budget deficit.
It seems that the new chancellors determined actions are supporting UK credibility in financial markets. Against the Euro, sterling is currently trading within touching distance to this year’s high at 1.2177. Cable has also perked up, trading at the highs for the month. It is possible we will see a retest of the 1.5000 level in the coming days.
However, from a longer term perspective, it is likely that the significant fiscal cuts on growth in the UK economy will hinder support for sterling.
Wednesday 23 June 2010, 02:41pm
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